2017 Integrated Report
2017 Integrated Report Our sustainable value creation Consolidated Non-Financial Statement pursuant to Legislative Decree 254/2016
unicreditgroup.eu
Report structure Index
UniCredit published a Sustainability Report each year from 2000 to 2013. In line with the most recent international developments Chief Executive Officer’s Message 4 in corporate reporting, since 2014 the Group has continued to report on sustainability in an Integrated Report (the “Report”) under the GRI Guidelines and the IIRC Framework. The aim is to describe the Group’s financial and sustainability performance, business model, corporate governance, risk management, compliance, competitive environment, strategy and capitals. Highlights 6 UniCredit has prepared this document in compliance with the requirements of Articles 3 and 4 of Legislative Decree 254/2016, Our Purpose & Identity 8 which implements European Directive 2014/95/EU in Italy. In addition, the Report is part of UniCredit’s principled effort Our Value Creation over time 10 to further develop its compliance with the European Commission’s Guidelines on non-financial reporting and advance Governance 12 understanding of all aspects of its business. Risk Management and Compliance 14 The Report has been approved by the Board of Directors of UniCredit SpA on March 5th, 2018 and has been produced by the Group Sustainability & Foundations function, in collaboration with the Strategy, Business Development and M&A function. Our Business Environment 20 In 2017, in line with the requirements of Legislative Decree 254/2016, a specific policy was adopted to define the roles, Business Model in action 22 responsibilities, activities and controls and to coordinate the flow of information between UniCredit’s parent company, regions, Stakeholder Engagement 24 divisions and legal entities in relation to the process of preparing the Consolidated Non-Financial Statement. The Report should be considered in its entirety, including its Supplement, which is available in the Sustainability section of our Our Strategy 26 website (www.unicreditgroup.eu) and contains a number of essential indicators and underlying quantitative data. Strategic plan 28 The guidelines adopted for the preparation of the sustainability information included in the 2017 Integrated Report, including Integration of Strategic Pillars and Capitals 28 the Supplement, are the “G4 Sustainability Reporting Guidelines” and the “Financial Services Sector Disclosures,” both issued Strengthen and optimize capital 29 in May 2013 by the Global Reporting Initiative (GRI). The principles contained in the International
To determine the reporting boundaries, in 2017, a risk-based analysis of the Group’s legal entities consolidated on a line by line GRI and UN Global Compact Indexes 64 basis was carried out by UniCredit SpA. The purpose was to identify the relevant companies and ensure the Report would provide a proper understanding of the Group’s activities, development, performance and relevant impacts. This reporting perimeter Report of the External Auditors 73 represents 97% of Group’s FTEs. The reporting boundaries include 14 countries where the Group has significant operations: Italy, Germany and Austria in Western Europe, and Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Supplement Romania, Russia, Serbia, Slovakia and Slovenia in Central and Eastern Europe. This year, data and information relating to Bank Determination and distribution of Value Added S. 2 Pekao, Pioneer Global Asset Management and their subsidiaries are not included in the reporting boundaries, following the sale of Main partnerships and affiliations S. 4 Bank Pekao to Powszechny Zakład Ubezpieczeń SA in June 2017 and of Pioneer to Amundi in July 2017. For figures related to the exposure to renewable energy sector, Yapi Kredi (accounted for by the equity method in the Consolidated Report and Accounts) Selection of 2017 awards S. 8 portfolio has been included pro quota. Community contribution and initiatives in support of Communities included in the “Social Governance S. 10 and relationship Capital” chapter include data and information related to UniCredit Foundation and UniCredit & Universities Risk Management and Compliance S. 16 Knight of Labor Ugo Foscolo Foundation (the “UniCredit & Universities Foscolo Foundation”), not included in the perimeter of the Stakeholder Engagement S. 32 Consolidated Report and Accounts. The perimeter considered in the paragraph of the Supplement “Compliance - Whistleblowing” Human Capital S. 36 includes the legal entities currently monitored and considered relevant by Group Compliance. For figures related to staffing and Social and relationship Capital S. 50 calculations of the Value Added, the scope of the Report corresponds to the 2017 Consolidated Reports and Accounts, unless Natural Capital S. 54 otherwise indicated. Any conditions that may limit the scope of the data are clearly disclosed throughout the Report.
To ensure reliability, the Report includes directly measurable quantities and limits the use of estimates as much as possible. Potential estimates are based on the best available information or spot checks. Restatements of previously published figures that have been provided for comparison are clearly indicated as such.
The Report was subject of a limited assurance engagement (according to the criteria set out by the ISAE 3000 Revised principle) by Deloitte & Touche S.p.A., which, at the end of the work performed, released a specific report with regard to the compliance of the information contained in the Consolidated Non-financial Statement prepared by UniCredit as required by the Legislative Decree 254/2016.
2 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 3 Our investments in digital aim to improve the network with new service models for retail and customer experience as we continue to optimise SME customers as well as a strong multichannel Chief Executive our processes and our cost base. New commercial strategy. Cost reductions are progressing according dynamics are driving how we train and develop to plan. In two other core divisions, CEE and CIB, our people. we have further strengthened our leadership Officer's positions while keeping a strong focus on risk. Our management is clear on this vision and their message actions are underpinned by a strict long-term Finally, In terms of adopting a lean but incentives structure based on the plan’s key steering centre, decisions taken at our latest performing indicators. All our people are focused EGM concerning, for example, a simplified share on the ongoing execution of Transform 2019. structure, position us as best in class in terms It is their energy, commitment and hard work of European corporate governance. which allows UniCredit to deliver tangible results. Finally, on behalf of the Board of Directors and As presented to investors at the 2017 Capital the whole Group, I would like to extend a special Markets Day in December, our performance thanks to Giuseppe Vita, whose successful tenure is fully on track and we have confirmed all as the Chairman of UniCredit is coming to a the Transform 2019 key targets, with a better close. Giuseppe's significant contributions over risk profile and an improved dividend payout. the past six years have been very precious to We are transforming our development. His vision and support have through decisive We have strengthened our capital position, enabled UniCredit to grow into one of the few resulting in a lower SREP Pillar 2 Requirement truly pan European commercial banks. actions. Everything and an S&P upgrade to a BBB rating with a stable outlook. We have confirmed our 2019 CET1 ratio Sincerely, we do is designed target whilst anticipating additional regulatory to make UniCredit headwinds during the plan period. Post 2019, Jean Pierre Mustier the CET1 ratio will remain above 12.5 per cent, Chief Executive Officer a true pan European thanks to an organic capital generation that will UniCredit S.p.A. Winner. fully absorb the expected regulatory impacts. In terms of asset quality, we signed binding Jean Pierre Mustier agreements to reduce our stake in FINO to below Chief Executive Officer 20 per cent. A more disciplined risk management strategy and underwriting processes are driving significant improvements in all our asset quality metrics. Finally, as announced, we are improving on our original Group Gross NPEs' target, cutting Dear Stakeholders, a further €4.0bn by the end of 2019. The full rundown of the Non Core portfolio, which will I would like to thank you for your ongoing Our strategy is to be One Bank, One UniCredit: occur by end 2025, is entirely self-funded. support during our transformation. At UniCredit, a simple, successful, pan European commercial we are taking decisive actions to become more bank, with a fully plugged in CIB, delivering In terms of transforming our operating model, competitive and build a strong, sustainable a unique Western, Central and Eastern European we have confirmed our overall revenues and cost Bank, poised for future growth. We have network to our extensive client franchise. targets. Our FTE and branch reductions are ahead executed on all our commitments in 2017, of schedule and our digital and IT transformation including a successful €13bn capital increase This strategy is long-term. What we are doing is fully on track. and the disposals of Pioneer Investments today to implement Transform 2019 - our and Bank Pekao stakes. We concluded FINO strategic plan - is laying the groundwork for We continue to maximise commercial bank Phase 1, with the sale of a €17.7bn portfolio. the future. It is changing the way we work to value, with the ongoing transformation resulting Everything we do is designed to make UniCredit anticipate our clients’ medium-term evolution, in higher productivity. Our activities in Western a true pan European Winner. including their use of multiple channels. Europe continue to benefit from the revamped
10 2017 Consolidated4 UniCredit Reports • 2017 and AccountsIntegrated · UniCredit Report UniCreditUniCredit · 2017• 2017 Consolidated Integrated Reports Report and Accounts5 11 UniCredit European Russia Highlights Banking Network Hungary
Slovakia UniCredit is a simple successful Pan European Commercial Bank, with a fully plugged in CIB, delivering a unique Western, Central and Eastern European network to our extensive client franchise: 25 million clients. UniCredit offers local expertise as well as an international one reaching and supporting Germany its clients globally, providing them with unparalleled access to leading banks in its 14 core markets as well as in other 18 countries worldwide. UniCredit European banking network Czech Republic includes Italy, Germany, Austria, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Hungary, Romania, Russia, Serbia, Slovakia, Slovenia and Turkey. Austria
Slovenia Financial Highlights1
Operating income Total assets Italy € 19,619 m € 836,790 m Net profit (loss) € 5,473 m Common Equity Tier 1 ratio* Shareholders' equity 13.60% Croatia Serbia € 59,331 m Romania Bosnia and Herzegovina Bulgaria Turkey Revenues1 (%) Market Shares2 (%)
Commercial Banking Italy Italy Austria Italy 3 8 10 14.0 11.1 CEE Division Germany 1 x Bosnia and Herzegovina Romania 13 CIB CEE 0.5x by 20 23.0 9.5 36 Commercial Banking Germany by Austria Business 46 Bulgaria Russia Lines Commercial Banking Austria Regions 19.7 1.5 20 Asset Gathering Croatia* Serbia 24 27.3 11.3 20 Czech Republic Slovakia 8.5 8.5 Germany Slovenia 2.5 7.5 Hungary Turkey 9.0 9.1
1. Data as at December 31, 2017. In accordance with IFRS5, the profit/loss of Bank Pekao S.A., Pioneer Global Asset Management S.p.A. and their subgroups’ companies till the date of the deconsolidation, were recognized in Income Statement under item “Profit (loss) after tax from discontinued operation”. 2. Market Shares in terms of Total Loans as at November 2017. Disposals were finalized during 2017. * data as at October 2017. * Fully loaded CET1 ratio. Source Company data, National Central Banks.
12 2017 Consolidated6 UniCredit Reports • 2017 and AccountsIntegrated · UniCredit Report UniCreditUniCredit · •2017 2017 Consolidated Integrated Reports Report and Accounts7 13
Value Creation over time Our Purpose Main 2017 Results Unique culture and Identity Governance Governance model Board Composition
Risk Management and Compliance Risk Management Compliance culture Our Purpose and Identity Our Value Creation → Our Value Creation over time over time
Our vision is to be One Bank, One UniCredit. We are a simple, successful pan-European We are realizing our vision by making UniCredit an At its heart, our business is to help customers and MATERIAL TOPICS commercial bank, with a fully plugged in Corporate & Investment Banking, delivering a effective, efficient and profitable Group – one that stakeholders manage social and environmental unique Western, Central and Eastern European network to our extensive client franchise. supports the advancement of local communities, the challenges and invest for the future. Their success competitiveness of enterprises and the well-being of guarantees the sustainability of our business. individuals.
Our highest priority is to serve our customers the very Building a unique culture to support C PI best we can. To achieve this, we rely on the quality and our value creation commitment of our people, as well as on our ability to Social and collaborate effectively and generate synergies as One For our Group, establishing a shared culture of inancial Human relationship atural Intellectual Bank, One UniCredit. We will also take care to accept One Bank, One UniCredit represents an important only the right kinds of risk and to maintain discipline in milestone along the road to sustainability. The how we execute our strategy. integrity and consistency of our values and behavior form the foundation of this endeavor. The underlying set of resources and relationships that OV C we depend on to create value are known as capitals. Our Five Fundamentals2 are the principles that inform input Groupwide, we work to responsibly manage our financial our actions, today and into the future. capital, human capital, social and relationship capital, IV I natural capital and intellectual capital. This effort is Ever since they were first endorsed by our Board O underpinned by the success of our clients and the trust of Directors, our System of Values and our Code of Customers irst and support we receive from our stakeholders. Conduct have comprised the core of our Group’s eople evelopment organizational culture. M Cooperation Synergies MA C IVI I Risk anagement Our business model driving synergies and nities xecution iscipline streamlining our operations, in combination with Our Code of Conduct outlines our approach to d opportu Commer ial an in and isks an our efficient, informed and client-focused Corporate managing compliance risks and underscores the Corporate Investment an in & Investment Banking division, facilitates the legal and ethical standards necessary to run our conversion of our capitals into outputs and outcomes business successfully. At the same time, the code
that help us achieve our strategic goals and create requires us always to protect our clients’ interests,
CO PO value for society and the environment. mitigate risks, comply with financial regulations,
P I OP
CI I IP
By offering responsible lending, savings, payment assure market transparency and safeguard
and investment products, we enable individuals confidential data.
r output a to improve their quality of life and enhance their n s o financial stability. To enhance our sustainability as a bank, we are also rm By providing funding to small, medium and large reinforcing our risk management culture, which is an 01 outcomes businesses and financing the development of key essential driver of business development. sectors, we contribute to economic growth, job creation and innovation. Accountability for risk is a high priority for every By improving financial literacy, promoting inclusion UniCredit employee. To ensure the healthy growth and gender balance and conserving natural resources, of our business, all colleagues must be aware of we also contribute to the achievement of the United the risks inherent in every action they take, every CO O IC V OCI V VI O V Nations’ Global Goals for Sustainable Development.1 product they create and every deal they originate. n operating employee GHG emissions Our Five Fundamentals income engagement index since 00 n m n loans and receivables contributions port olio exposure ith customers to communities to rene able energy sector
1. Refer to UniCredit Contribution to the Sustainable Development Goals section for more information. 2. Refer to the 2016 Integrated Report for more information.
10 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 11 Our Purpose and Identity Governance → Governance
Board composition MATERIAL TOPICS The composition of the Board of Directors of oard s i s and no ed e areas UniCredit’s system of corporate governance promotes clarity, accountability and the UniCredit SpA currently in office quantitatively and anageria entreprene r ip e perien e creation of sustainable long-term value. qualitatively corresponds to the theoretical profile approved by the board itself before the appointment inan ia and a o nting of the supervisory body, in compliance with current Or ani ationa and overnance structures provisions. Governance model Internationa e perien e as o ec Also in light of the information given by the persons UniCredit is an Italian listed company, with a concerned, the requirements concerning professional an ing e tor traditional management and control system, I experience, integrity and independence, gender O which assigns specific responsibilities to the O balance and the maximum number of directorships P I O O O an ing and inan ia reg ation Shareholders’ Meeting and allows for a clear O O I O I O that Directors may hold have been accounted for. exchange of views between shareholders and Interna management on fundamental decisions relating udit oard in nu ers o a o io po iti a no edge to governance. These include appointing and removing directors, appointing members to the a ance o e ecutive and non e ecutive directors o a d na i no edge Board of Statutory Auditors, granting a mandate Interna Corporate Contro Governance, for external auditing to an audit firm and C e e ti e Ri O o ination and dit o p ian e and ega approving all associated fees. Such decisions also Co ittee O I taina i it Co ittee include the approval of financial statements, the non e e ti e allocation of profits, resolutions on remuneration and incentive policies and practices, and setting criteria to determine compensation to be made in Re ated partie and Re neration oard ender a ance it In e t ent Co ittee the event of early termination of employment or Co ittee 1 early retirement from office. FOCUS e a e a e Corporate Governance actions2 In light of the 2018 renewal of its Board of Directors, Internal Control System O e roup UniCredit SpA has approved significant changes to the bank’s governance to simplify and align it with An effective and efficient internal controls system the best international standards. is, in fact, a prerequisite for the creation of value in I O 0 0 the medium-long term, for safeguarding the quality G I G These changes included: O I O I of the activities, for a correct risk perception and for • the recommendation to shareholders on the an appropriate allocation of capital. Geo rap ica i occasion of said renewal to: Group u an Group is - reduce the number of the Board of Directors As a matter of fact, it establishes the rules, apita ana e ent members from 17 to 15 procedures and organizational structures, as Ita t er o ntrie - introduce a maximum number of three mandates well as information flows, that ensure effective trate y and Group endin Office • the reduction from three Vice Chairmen to one management of risks and keep UniCredit’s activities Vice Chairman in line with its corporate strategies and policies, Group Identity Group oard independence • the empowerment of the Board of Directors to o unication e a a per rti e o which are founded on sound, prudent management o iation and t e present its own list of candidates for election of principles. Group Group Corporate o ernan e Code directors Institutiona o p iance • the approval of an ad hoc procedure to identify e u atory airs UniCredit’s Internal Control System relies on control a per U candidates for the post of Board of Directors bodies and functions, involving, each one within Genera C ie perating ana er Office member, including the CEO and the Chairman its respective competence, the Board of Directors, • the increase from 1 to 2 of the number of board vera e tenure en t years the Internal Controls & Risks Committee, the Chief members appointed from the second list receiving Executive Officer as officer in charge of the internal G the highest votes. controls and risks management system, the Board CI Co ntr C air an C Ita et oard attendance rate of Statutory Auditors, as well as the corporate i i ion i i ion at ering functions, with specific tasks to that regard.
A. Includes Austria, France, Germany, England, Poland, United Arab Emirates, A. Set up according to the Legislative Decree No. 231 dated June 8, 2001. United States of America. B. Position covered by two Co-Heads. B. Legislative Decree No. 58 dated February 24, 1998.
1. Refer to the annual Report on Corporate Governance and ownership structure and the Group Compensation Policy for more information. 2. Refer to the Governance section on our website (www.unicreditgroup.eu) for more information.
12 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 13 Our Purpose and Identity Risk Management → Risk Management and Compliance
internal and external stakeholders. It is therefore Over the course of 2017, we have consistently MATERIAL and Compliance embedded in our daily management activities via pursued the risk reduction strategy outlined in TOPICS rules, operational limits and compensation programs. the Transform 2019 plan. This involved actions The RAF is directly linked to our incentive system; to reduce our exposure to non-performing loans Risk is intrinsic to banking - managing risk is the core of our business. Our strategic plan, by setting risk embedded goals for Group executives (NPLs), which we decreased by 14 percent in the last Transform 2019, emphasizes the mitigation of risk to assure the healthy long-term growth and colleagues responsible for taking significant year, mainly by completing the FINO project.1 While of our business. To remain a sustainable banking institution, we are reinforcing our risk risks, it encourages prudent risk-taking across the that initiative deconsolidated a stock of roughly €17 management culture, making risk awareness paramount across our Group. organization. billion in NPLs in July 2017, we also significantly decreased inflows of new NPLs over the past year, Due to constant changes in the regulatory, financial reducing them by 25 percent. This was a result and economic environment, the RAF is subject to of our prudential approach to risk, which we have a continuous process of improvement. In 2017, adopted in recent years to further strengthen our Guarantee strong risk it integrated additional indicators to meet new discipline in terms of granting loans and monitoring regulatory requirements, better capture the loan portfolios. management underlying risk in the evolution of our business, achieve the objectives of our strategic plan, and steer We reinforced this approach in 2017 by finalizing our Our strategic plan prioritizes decisive actions that Our ris et odo o y our business functions. review and rationalization of the Group Credit Risk resolve legacy issues, transform the bank, and build Rules Framework, which should further improve the on our existing competitive advantages. We are doing is quality of future loan originations and of our credit this to capture opportunities and secure sustainable identification Managing and monitoring risks portfolio, and strengthen our risk management levels of profitability for our enterprise. In this effort, governance. Group Risk Management – whose mission is to is Risks constantly evolve, and must be monitored control Group risks as defined by UniCredit’s Board easure ent so they can be properly managed. Whenever our Moreover, in 2017 we launched a special project, of Directors – is continuing with its conservative I Group updates its RAF, the Risk Management approved by the Board of Directors, to focus on approach to risk. As in recent years, the function is function incorporates it into a set of operational Key the redevelopment of existing models to measure is particularly focused on further reinforcing its appetite Performance Indicators (KPIs) to closely monitor credit risk. Our aim is to rationalize the landscape e i ion on i ri 2 disciplined approach to new loan originations and the and o ri to a e UniCredit’s activities and their encumbered risks. of the Internal Ratings-Based (IRB) model and help monitoring of loans. I These KPIs support risk management efforts in the take into account impending changes to regulatory is application of the most adequate techniques to either requirements (i.e., the latest consensus factorization This year, to ensure the effectiveness of risk controls ana e ent tolerate, mitigate, transfer or even eliminate risk. of Basel IV). and minimize any conflicts of interest, UniCredit e i ion on o dyna i pro ess separated risk management from credit-related to a e and anage ri As a simple pan-European commercial bank, oan o nt a o operational functions. This organizational change, is onitorin UniCredit’s main risk exposure relates to credit. t classification e 1 2017 ange enacted October 1, 2017, delegates distinct This is evident in the breakdown of Risk Weighted responsibilities to the Group Risk Management (GRM) Assets (RWA). Its credit risk, at 86.4 percent, is ad oans 27 0 1 function and to the Group Lending Office (GLO). diversified across geographies and asset classes, Dividing responsibilities between GRM and GLO Identifying and measuring risks while its operational risk RWA and its market risk Unlikely to pay 1 22 1 provides more independence and control compared RWA account for €32.5 billion (9.1 percent) and to the operating business functions. We identify and measure risk with a set of rules, €16.1 billion (4.5 percent), respectively, of its total Past Due loans 1 10 20 To efficiently manage risks, an organization must be methodologies and policies that are also used to RWA. strongly aware of them. UniCredit’s risk management support the Group’s strategic planning processes. Per or in oans 2 0 2 process begins by identifying the risks the bank is Aside the Basel Pillar 1 risks, UniCredit faces risks potentially exposed to, and then measures those When determining risk, it is critical to assess the related to liquidity, interest rates, reputation, risks. macroeconomic and microeconomic contexts in compliance, the environment, society and other Coverage profile ratio which UniCredit operates. We must account for the emerging areas.1 With that information, our Group decides how much continuously evolving regulatory framework while risk it is willing to assume, establishing its Risk defining our risk appetite and calculating the best y type A. Loan Classification includes: Appetite Framework (RAF). UniCredit’s business trade-offs between risk and return. n Bad Loans: exposures to borrowers in a state of insolvency (even when not activities need to remain within risk limits. recognized in a court of law) or in an essentially similar situation, regardless of any loss forecasts made by the bank; Unlikely to Pay: classification in this This is an approach that requires continuous Our RAF is aimed at achieving sustainable levels category is the result of the judgment of the bank about the unlikeliness, monitoring of UniCredit’s risk profile to mitigate any of growth and profitability for our business. This without recourse to actions such as realizing collaterals, that the obligor will pay in full (principal and / or interest) its credit obligations; Past Due deviation from its established risk appetite. These framework, approved by the Board of Directors, Loans: problematic exposures that are more than 90 days past due on any actions, which form our risk management method, establishes our desired risk profile for our short and material obligation; Performing loans: exposures which are not past due for ar et perationa Credit more than 90 days or to borrowers in a problematic state. are guided by a strong approach to risk culture across long-term strategic objectives and our business plan, the Group. taking into consideration the expectations of various 1. Refer to the 2016 Integrated Report for more information. 2. Advanced internal ratings based approach credit risk measurement techniques proposed under Basel II capital adequacy rules for banking institutions.
14 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 15 Our Purpose and Identity Our Purpose and Identity → Risk Management and Compliance → Risk Management and Compliance
To manage operational risk, our Group maintains In 2015, we began using our system of governance Reinforcing risk awareness Over the year, we also revised our risk training MATERIAL a series of policies and procedures for its to reinforce our management of environmental offer to make it more easily accessible and TOPICS measurement, control and mitigation. In accordance and social risks. The Group Environmental and Our Group has adopted a structured and scalable to all UniCredit employees. The new with the UniCredit operational risk framework, we Social Council (GESC)3 proposes UniCredit’s strategy, comprehensive approach to strengthening its risk offer, available in 2018, provides a comprehensive identify and assess the risks inherent to all our annual objectives, and activities related to executive culture. This approach aims to enhance the mindset, set of online modules in two different levels, material products, activities, processes and systems. implementation of UniCredit’s environmental and accountability and behavior of all UniCredit employees. enabling colleagues to deepen their awareness This is a regular process of monitoring risk profiles, social initiatives and commitments, addressing and knowledge of risk according to their different material risk exposure, and risk mitigation strategies. potential related risks. To further raise risk awareness across the Group, we needs. Colleagues will have a view across all In line with the strategy of our Transform 2019 plan launched a communication campaign focused on the risk topics, from the economic and regulatory to reduce operational risk, in 2017 we established an Two Group statements – our Environmental Risk Appetite Framework and published articles on environment, to primary risks, to the impacts Information and Communication Technology (ICT) & Commitment and our Human Rights Commitment the Group Intranet about risk management activities of risk management policies on capital, bank cyber risk roadmap. This involved holding dedicated – describe the approach, roles and responsibilities, and achievements. performance and clients. workshops to increase risk mitigation skills and principles, rules, procedures and systems adopted awareness, boost analysis and monitoring of external by UniCredit to prevent and manage environmental, and internal incidents, and establish ICT and cyber social and human rights impacts and risks in our risk indicators. These workshops, involving 15 legal operations and value chain. FOCUS entities, can help our Group develop stronger control Our approach to human rights processes and identify potential areas of weakness. In addition, we have adopted detailed guidance The UniCredit Human Rights Commitment, drafted in greater detail how UniCredit is addressing both As an outcome of these initiatives, a specific indicator policies for sectors relevant to UniCredit that could 2011, describes the principles and systems adopted positive and negative human rights impacts to assess ICT risk based on major ICT security pose environmental and social risks.4 These policies by the Group pertaining to human rights. This text within its operations and value chain. In regards incidents has been defined and included in UniCredit are regularly reviewed and reinforced with various was the first step towards aligning our Group with to monitoring, we have clarified the various 2018 RAF. forms of employee training. This training has been the UN’s Guiding Principles on Business and Human monitoring mechanisms and processes in place developed in partnership with external experts to Rights. It is informed by international declarations within our organization. It remains vital to safeguard against reputational facilitate consistent Groupwide implementation of and conventions, standards, principles, guidelines risks. Since 2015, we have deployed a monitoring these specialized policies. In 2017 more than 6,000 colleagues received and recommendations, including The Universal system to strongly reinforce the Group’s capacity to human rights training. Declaration of Human Rights and the International identify and analyze the salient reputational risks in the Roughly 360 colleagues, including relationship Labour Organization’s Fundamental Human Rights Through various working groups and initiatives, we financial sector. This system monitors external events managers, risk managers and members of other Convention. continue to promote constructive dialogue on human that may pose reputational risks and assesses their functions involved in due diligence processes, rights with our external stakeholders, including potential impact on UniCredit by engaging with the have participated in this training program Over the past two years, as we have evolved customers, investors, rating agencies, peers and civil internal functions (e.g., Investor Relations, Compliance) in the last three years. and responded to the expectations of our society organizations. that intimately understand the perspectives of our stakeholders, we updated the UniCredit Human many different stakeholders. This information is We are currently assessing the feasibility of the Rights Commitment. The revised document, which This includes also our participation at the Thun Group integrated with data on internal events to make implementation of the most recent trends and is available on the UniCredit website, summarizes of banks, informal group which regularly discusses our risk management process more complete. The development in terms of monitoring climate-related the Group’s approach to human rights, focusing how to apply United Nation Guiding Principles Group Operational and Reputational Risk Committee risks and their financial impacts on our business on stakeholder categories such as employees, on Business and Human Rights (UNGPs). At the discussions focus on this process on a quarterly basis. model and strategy. customers, suppliers and communities. beginning of 2017, the Thun Group published its second discussion paper.5 In regards to governance, we have clarified how human rights impacts are managed by the UniCredit is also member of UN Global Compact - governance rules and structures that assign Global Compact Network Italy Foundation, which is guidance, support and control roles. In regards a strategic policy initiative that is promoted by the to impact management, we have explained in United Nations at the national level.
3. Refer to the 2016 Integrated Report for more information. 5. Refer to https://business-humanrights.org/en/thun-group-of-banks-releases-new-discussion-paper-on-implications-of-un-guiding-principles-for-corporate- 4. Refer to the Supplement – Risk Management and Compliance and to the Sustainability section on our website (www.unicreditgroup.eu) for more information. investment-banks for more information.
16 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 17 Our Purpose and Identity Our Purpose and Identity → Risk Management and Compliance → Risk Management and Compliance
Strengthen a culture The plan lays out the guidelines, strategic priorities, During the year, UniCredit employees received more forthcoming regulations and triggers the necessary MATERIAL and main initiatives to be implemented during 2017 than 500,000 hours of compliance training. implementations at different levels of the Group. TOPICS of compliance as a aimed to bolster these pillars at Group level. In 2017, this involved launching special projects fundamental pillar In 2018, we will continue to invest in increasing the to address a number of key regulations and issues, technical skills of senior AML colleagues through the including: General Data Protection Regulation for the Group Compliance culture Certified Anti-Money Laundering Specialist (CAMS) (GDPR), MiFID II, conflicts of interest, Market Our Group is focused on building and enforcing a certification. We will prioritize a specific Groupwide Abuse (MAR), Regulation Revised Payment Service Compliance is essential to the legitimacy of our strong and common culture of compliance to endorse project to increase proximity between Compliance Directive (PSD2) and AMLD 4. business and the sustainability of our Group. It is and promote risk discipline, integrity, and sustainability and all of our other functions, and continue to built into UniCredit’s values and forms an integral with all its stakeholders. promote and endorse compliance standards and In 2018, Compliance will continue with these efforts part of our business strategy. requirements for all employees. to detect and interpret forthcoming regulations. In 2017, we have defined and implemented a Tone It will also focus on digitization initiatives to help from the Top program aimed to ensure that our streamline processes, support the Group business Reinforcing compliance management leaders remain focused on compliance Controls & Monitoring digital strategy, and enhance the function’s own work issues, requiring them to periodically remind all Group In 2017, the Compliance risk assessment methods through Regtech solutions.4 Compliance is inseparable from our Group’s business employees about the expectations for conduct and methodology was updated to meet industry activities. Adherence to laws and regulations is behaviours at UniCredit. best practices and international guidelines (e.g., neither an obstacle nor a drag on growth, it is a Wolfsberg,2 Society of Corporate Compliance and prerequisite to running a sustainable business. In addition, the UniCredit Code of Conduct was Ethics - SCCE3). The new methodology, which FOCUS updated for all countries within the Group. Its employs a more quantitative approach and Anti-corruption Regulations are part of our operational environment principles have been widely disseminated through provides a multi-level perspective (e.g., giving the UniCredit has zero tolerance towards acts of and we must comply with them while remaining a number of initiatives, including a Groupwide option of having aggregated views for the Group, corruption and prohibits them in any shape or form, focused on our customers’ needs in all of our communication campaign for all colleagues, a individual legal entities and business lines), uses both direct and indirect. UniCredit’s approach to this business areas, in all of the countries where we are dedicated brochure, and mandatory training for benchmarks industry best practices to further is set out in our Group’s Policy on Anti-corruption. present. By adhering to all applicable laws, rules and all employees, with a final exam. To further raise enhance our noncompliance risk management. The It consists of a detailed program implemented by regulations, UniCredit helps prevent misconduct and knowledge and understanding of the Code of methodology was applied in a pilot phase to anti all legal entities. In 2017, among other activities, reduce the risk of sanctions. Conduct, the Group organized specific events for money laundering and financial sanctions areas we updated such policy, launched a whistleblowing senior managers recalling its principles, the Group’s in 2017 and will be progressively applied to other campaign, and focused on the program of control of 5 Consistently to our Transform 2019 strategic plan, expectations, and responsibilities of each individual areas from 2018. relevant intermediaries. the UniCredit Compliance function is focused on UniCredit employee. During the year UniCredit employees received enhancing risk discipline and the effectiveness Every year risk assessments are reported on a more than 60,000 hours of anti-corruption training. of actions to mitigate noncompliance risks, Throughout the year, we facilitated greater quarterly basis to relevant Group bodies such as the strengthening common compliance standards and understanding of a broad range of compliance issues Internal Controls and Risk Committee, the Group rolling them out across the Group, and addressing through regular Groupwide trainings that were Risk & Internal Control Committee, and the Board of Italian Legislative Decree 231/2001 regulatory challenges and new emerging risks preceded by instructional videos. Our Compliance Statutory Auditors. UniCredit SpA, aware of the importance of a correct affecting the Group. Academy offer was robustly strengthened in 2017 application of the principles established by the by adding two specialized modules on Anti-Financial Italian Legislative Decree 231/01, provides the Italian Crime and Markets & Investments, to its core Advisory companies belonging to and directly controlled 2017 Compliance Plan curriculum. These modules have been designed The Compliance function performs another vital by the Group with principles, guidelines and the and developed to address the needs of Compliance task: staying abreast with regulatory changes most suitable procedures to be adopted for their 5 UniCredit’s 2017 Compliance Plan, approved by the colleagues as well as those working in UniCredit’s and promptly identifying UniCredit’s obligations. established organizational and management model. Board of Directors, is built upon three strategic pillars: business lines. Our Compliance function monitors and analyzes
We expect these training efforts to be bolstered I I O P I P by our Compliance Induction program, which we began in 2017 to formally instruct every new employee about essential compliance issues as they o p ian e ontro s begin working at UniCredit. Meanwhile, to further u ture onitorin d isory our managerial training, this year two courses on proper conduct and business ethics, which feature our sustainability framework, were developed for managers. Groupwide, mandatory training focused on conflicts of interests, antitrust, market abuse, Markets in Financial Instruments Directive (MiFID II)
and anti-money laundering (AML, with focus on the 2. Wolfsberg, an association of 13 global banks, develops financial industry standards for Anti-Money Laundering (AML), Know Your Customer (KYC) and Counter EU’s Fourth Money Laundering Directive – AMLD4).1 Terrorist Financing (CTF) policies. 3. SCCE is a non-profit association that provides resources for compliance professionals from various industries. o on t re ro e e trategi 4. The use of new technologies to solve regulatory and compliance requirements more effectively and efficiently. 1.o AMLD4, pr den e entered and into force on po i ie June 26, 2015, accordsad i e a key role it to the an principles of risk analysis and corresponding adequate safeguards. 5. Refer to the Supplement - Risk Management and Compliance section for more information. integrit i ed e ani e e to ard 18 UniCredit a ro p • 2017and Integrated ontro Report t re UniCredit • 2017 Integrated Report 19 e p o ee de igned and reg ator e e ted a enge rigoro and e e ti e Business Model in action Our Business Market environment Our Distinctive Assets
Environment Stakeholder Engagement Relevant topics for our stakeholders Business Model O I I I
Pan uropean ni ue ient ran ise istin ti e a tories MATERIAL TOPICS in action o er ia an million clients CIB platform fully plugged in trong pre en e in o ntrie e t in a CI prod t pro ider The banking sector is in flux, with regulations, macroeconomic conditions and customer op ran ed a et in rope e ond arge t pro ider o behaviors changing at a rapid pace. UniCredit’s Transform 2019 plan has been developed n in tria and C a et orporate oan in U n Co ered ond to specifically address these changes. Our simple commercial banking business model n in Ita n in Germany Co ered ond UR and our distinctive assets will enable us to turn this environment to our advantage, ond in UR becoming a better bank that reliably delivers sustainable, long-term profitability. of revenues from Commercial BankingC I I O O o ro t and o interest rates are a e tin e ery an in urope
ro t in ine 0 uro one 0 it onsensus 2 2 eal o t MM and a e a e 2 0 2 0 MMAA 1 1
UC e ti ate 1 0 1 0 O I O PO Con en I I I a g 2017 201 0 0 I 2017 201 201 2017 201 201 Indi idua s raditiona orporate and e i e and ea a e to tran a tion an ing er i e o er or longer uri or id ap an ing prod t a along with full-fledged structured rates and yie d 2017 201 201 0 1 0 payments, mortgages, finance, capital markets and en iron ent 120 consumer finance, investments investment products, as a 10 B s o and a ing a o nt o ered 0 strategic long-term partner that 20 UC e ti ate t ro g traditiona and digita meets clients’ specific needs and 0 Con en C 0 anne de i er a e to e tern a g 2017 201 0 rope and C 0 ost In o e 0 o panies 2017 201 201 Tailored, profit-driven e enues o tion or entreprene r e re u atory ra e or or an in that help them conduct and finance is constantly changing, da to da ine it any ne re u ations e pe ted I e ro t o our usiness n in t e years to o e ai in at operation or e e te ne n depends on t e o petiti eness I addressin pro e t or trategie an in usto er e a iors o o panies and t e e ein • Banks’ loss absorbency capacity to ust not on y e i ediate y o indi idua s it in ea ountry Pri ate an in grant an orderly resolution of re o ni ed ut a so anti ipated A 360-degree advisory model, e top prioritie institutions in case of failure The adoption and growth of remote customized investment • Banks’ assets and liabilities having a channels continues at a rapid rate. in t e o ntrie ere e operate sustainable structure in terms of maturity trategie and a e to o a di ita snaps ot • Citizens who benefit from infancy • The under-provisioning of international markets through di i ion specialized advisors. % of world population er i e Non-performing loans (NPLs) n • The implementation of more stringent n • Percentage of young people not Internet criteria for the calculation of users in education, employment, or training Risk-Weighted Assets (RWA), limiting 2012 an ar 201 the use of internal models • People suffering poor housing ondition • A more timely recognition of credit ti e so ia n • Life expectancy without activity losses and adequate provisioning edia users limitations at 65 years of age. through the implementation of the ne a o nting tandard I R
A. UniCredit Group (UCG) house view. B. Average 201 -2019 calculated on a quarterly basis. For GDP growth source is Consensus Forecast for Euro one and Focus Economics for CEE. A. Italy, Germany, Austria, Bosnia and Her egovina, Bulgaria, Croatia, C ech Republic, Hungary, Serbia, Slovakia, Slovenia, Romania, Russia, Turkey. C. Average 201 -2019 calculated on a quarterly basis. For Euribor 3M source is future from Bloomberg as of 6 December 201 and for Mid Swap 10 is B. Data as of 9M201 , for Austria domestic assets as of 2015 on local GAAP (source eNB), for Germany only private banks. forward from Bloomberg as of 6 December 201 . C. CB Italy, CB Germany, CB Austria, CEE on new Group perimeter considered the disposals of Immo Holding, Ukraine, 30 Fineco, Pekao and Pioneer. D. Source: Digital around the world in 2018 report, by We Are Social; growth figures may in part be the result of improved reporting. D. Data as of 9M201 , includes 100 clients in Turkey, e cludes Fineco. E. Analysis based on proprietary methodology applied to the countries where we have a ma or operational presence: Italy, Germany, Austria, Bulgaria, Croatia, E. Data as of 9M 201 peers include: BNP Paribas, Deutsche Bank, Intesa Sanpaolo, Santander, Soci t G n rale. Hungary and Romania. Refer to the Social and relationship Capital chapter for more information. F. Source: Dealogic data from league tables as of 201 all positions by volume.
22 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 23 Our Business Environment Stakeholder → Stakeholder Engagement Engagement
In our work to closely monitor the interests and expectations of our stakeholders, we Since 2010, UniCredit has periodically assembled a The most important of these trends (big data, MATERIAL TOPICS periodically produce a materiality matrix that highlights their priorities and how we are materiality matrix that assesses the main interests population growth, aging societies, always-on addressing them. The materiality matrix graphically represents a vital aspect of UniCredit’s and expectations of the Group’s stakeholders. hyperconnectivity, climate change) were integrated business – stakeholder engagement. To produce the materiality matrix, we: into our materiality analysis following an internal • categorize and prioritize our stakeholders assessment carried out by the business functions • identify relevant issues responsible for evaluating the Group’s investments It helps us consider every stakeholder interest and expectation in our strategic decisions. • prioritize the identified issues in these issues. Over the years, we have developed many different tools to engage with our stakeholders • assess internal consensus on these issues.1 This regular survey of opinion leaders enables us and better understand our relationships with them. to quantify key macroeconomic changes. UniCredit’s listening activities engage the Group’s many stakeholders on an ongoing basis. By closely Another new listening initiative was our first monitoring the needs and opinions of every environmental, social and corporate governance stakeholder, we can devise better targeted strategies roadshow held in 2016. Through the roadshow,
n while steadily improving our decision-making, we gathered valuable feedback from our major S r S re o t i E e a e product offerings and service efficiency. investors about the effectiveness of our approach to r p a r t a n e a The table below lists the ad hoc dialogue tools that sustainability. r t o e d t S our Group has developed to collect stakeholder n e Re e ant topi S a n an i a i o feedback. Among these tools, the new opinion By incorporating these and other inputs into our E it or o r ta e o der pr S i p p ap leader survey provides valuable insights about which analysis, we believe that the materiality matrix will o ir O B a r C S ion i a t e a i systemic trends could present risks or opportunities continue to assist UniCredit’s senior management in S O E S C an rg o to the banking sector over the next 10 years. strategic decisions that create long-term value. O E ES nt E it are ES O S S E O E S id p o an E tr E O S an d i it an ta O ES n ea ia ialogue tools ith Stakeholders an in S O E S O E ES ES O S S E O E S E O S Customer satisfaction People Survey of uarterly webcasts ne-on-one and group O E O assessment E E professional engagement and conference calls meetings, calls O E E S Brand reputation Internal clients to present results Inno ati e an E assessment perceptions of ne-on-one and group O ES E E S E O O S a it and a e Mystery shopping headquarters services meetings, calls ig data C Surveys to er pro Group Intranet Portal i it Instant feedback Shareholders meeting o ietie ppo Social Media aging rt to Departmental online ro t ine Focus group, ation g ar ing op a communities o it workshops, seminars see age S e ti onn or urther in o per on a O S at S R io E e p na S t i i ri n o n r a n i t n a O e t R i t ig e e p e r r a C a S
E o o fi t O e n
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see age S or urther in o 1. Refer to the 2016 Integrated Report for more information.
24 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 25 Strategic Plan Integration of Strategic Pillars and Capitals Our Strategic Pillars Main 2017 Initiatives and Results strategy Targets 2019 Capitals Stocks of Capitals Main 2017 Initiatives and Results Community Impact Our Strategy Strategic Plan → Strategic Plan
Our vision is to be One Bank, One UniCredit: a simple, successful pan-European Commercial bank Strengthen and with a fully plugged in CIB, delivering a unique Western, Central and Eastern European network to our extensive client franchise. In December 2016, after an in-depth strategic review, we presented optimize capital our strategic plan, Transform 2019 to ensure we create maximum value for all our stakeholders. In 2017, we carried out several of the decisive actions and 2019. The final version of Basel IV, MATERIAL TOPICS We have already taken decisive action on a number of legacy issues and the plan is fully on track, outlined in the Transform 2019 plan. At the beginning of released on December 7, 2017, is somewhat yielding tangible results underpinned by group-wide business momentum in 2017. the year, we successfully completed a €13 billion capital more favorable than was expected.5 Setting an increase and sold Bank Pekao and Pioneer. Thanks to our implementation date of January 1, 2022, decisive actions, we confirm the fully-loaded CET1 ratio Basel IV requires a five-year phase-in period for the so 6 CAPITALS target will be above 12.5 percent in 2019, and increased called output floor only. the estimated dividend payout ratio for 2019 from 20 percent to 30 percent, to be paid in 2020. Up to 2019 and beyond, our strong capital position gives inan ia an o ia and at ra Inte e t a re ation ip us the means and resources to focus on growing our Our strong capital position is enabling us to better business and developing additional client activity in the anticipate additional regulatory headwinds in 2018 medium-term.
ADOPT LEAN BUT STRONG Fully loaded CET1 ratio evolution CORPORATE CENTER STRENGTHEN 5 I to dri e per or an e • Capital Increase: 1 i ion apita in rea e AND OPTIMI E CAPITAL STRATEGIC and a o nta i it on ded in ar 2017 201 7.54 Rein or e apita PILLARS eaner pport n tion and 72 bps of Bank Pekao: Capita opti i ation a tion tran parent o t a o ation • o p eted t e di po a o t e 2 per ent ta e in an e ao ne 2017 to Powszechny Zakład Ubezpieczeń SA ("PZU") IMPROVE Capita 3. 1 e Polski Fundusz Rozwoju SA ("PFR") ASSET UALITY MA IMI E COMMERCIAL In rea e BANK VALUE • o p eted t e di po a o t e In rea ing o erage ratio parti ipation in ioneer e ao In e t ent o ad oan ai ored trategie i po a o an anage ent and o In e t n trong ri di ip ine nergie and ro e ing e ion to an e ao e e er e ao and 1.5 2017 toget er it t e di po a o e ao ioneer In e t ent ioneer to er 2017 TRANSFORM rgani apita 4 bps of Pioneer: OPERATING MODEL • o p eted t e di po a o ioneer generation 0. igita i ation and pro e rede ign R d na i In e t ent operating o panie to Tra ndi 2017 nsform 201 I proved efficiency and customer focus and ot er e e t • Impact of 2017 net profit generation net 2017 o di idend a r a and 1 o pon 13. 0 stated a o nting e e t and ri eig ted The banking industry is operating in an era of constant dynamics will determine how we train and develop our a et e o tion flux, as regulations, macroeconomic conditions and employees and how we steadily optimize our cost base • I R ne a o nting tandard customer behaviors change at a rapid pace. UniCredit while maintaining a balanced risk profile. I R -0.5 and I a o t oan o pro i ioning aims to anticipate these changes and, whenever possible, • I o p eted t e e do n o turn them into opportunities to enhance our customer As we work to implement this plan, we will continue UniCredit ta e in FINO to e o 20 per ent 2 focus. This is how we will continue to achieve sustainable, to reinforce and make careful use of the capitals 2017 13.02 long-term profitability and contribute to the prosperity of available to us, with due consideration for the ways in pro forma the territories where we operate. which they are interconnected. • Regulation models procyclicality: in de ain ode ange Reg ation ode re a i ration and reg ation ange In December 2016, after an in-depth strategic review, This chapter describes the 5 pillars that are the basis pro i a it • Partial EBA guidelines anticipation: we released our strategic plan, Transform 2019.1 of Transform 2019 and provides an update of the partia g ide ine in de g ide ine re ated e e t and ot er inor ad t ent Our tangible results show that our transformative plan’s progress.3 anti ipation and actions are already paying off. rgani Capita 2019 key targets confirmed: eneration • Organic Capital Generation: - RoTE target >9 percent in de retained earning net One Bank, One UniCredit is the long-term vision for our - Fully loaded CET1 ratio4 >12.5 percent o di idend pa o t and o 1 o pon Group. As such, our transformation will not conclude R gro t and ot er inor ad t ent - Full year 2019 dividend payout increased from 201 >12.5 in 2019. Our actions today must anticipate the 20 percent to 30 percent medium-term evolution of our clients, new commercial - Self-funded full rundown of non core by 2025.
1. Refer to the 2016 Integrated Report for more information. 5. The Basel Committee on Banking Supervision’s regulatory capital framework, Basel IV aims to reduce the variability of capital consumption in the banking 2. Capitals are sources of value and relationships that are affected or transformed by the activities and outputs of our organization. sector by limiting the application scope of internal models for credit and operational risks. 3. Refer to the Capital Markets Day 2017 section on our website (www.unicreditgroup.eu) for more information. 6. Output floor: minimum capital level calculated according to Standardised approach requirement (i.e. new standardised + IRB capital requirement >= 72.5% 4. CET1 ratio measures a bank’s core equity capital in proportion to its total risk-weighted assets and is used to assess its financial strength. capital requirement considering the full portfolio under standardised treatment).
28 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 29 Our Strategy Our Strategy → Strategic Plan → Strategic Plan
Improving NPE targets
Reducing NPEs and improving their management is
a key priority of Transform 2019. The plan calls for MATERIAL Improve asset quality Deleveraging our stock of NPEs decisive and proactive actions on legacy issues, in Transform operating TOPICS addition to targeting gross NPEs of €44.3 billion at The Group’s drive to strengthen its capital structure In 2013, UniCredit set up a separate segment of the Group level. model and Maximize dovetails with measures aimed at improving the Italian loans: our non-core, which has a risk-return value of the quality of the Group’s assets. We are addressing profile that is not compatible with the Group’s The Group increased that ambition by a further €4 legacy issues mainly related to our non-core portfolio plan to reduce its exposure and free up capital billion by the end of 2019, bringing the NPE target commercial bank in Italy while continuing to enhance our risk discipline for business development and value creation down to €40.3 billion. Through sound origination, to improve the quality of new loans. initiatives.7 tight monitoring and an active recovery strategy, We aim to take our operating model to the next level including disposals in Central and Eastern Europe in terms of its technological sophistication, resource UniCredit has taken decisive actions to improve As part of our Non-Performing Exposure (NPE) (CEE), €2 billion of the new target will come from the efficiency and commercial effectiveness. To kick-start the quality of its assets and continue to de-risk deleveraging plan, in 2017 we reduced Gross NPEs Group-core. The other €2 billion will come from an this process, a number of programs have already its balance sheet. All relevant Group asset quality by 14 percent compared to 2016 year-end, down to accelerated rundown of non-core loans. been put in place. metrics have materially improved in the last 12 €48.4 billion. Group gross NPE disposals progressed months, thanks to ongoing disposals, disciplined loan during the year and reached €4.4 billion in the period, roup Core ross We are continuing to optimize our operating model, NPE ratioA 5.6 origination and strict risk management. of which €2.4 billion in the non-core. The rundown 0.3 from IT simplification to procurement and real estate, % of total loans of the non-core progressed with gross loans down 4.9 4.7 to ensure efficiencies over time. As we embark on this to €29.8 billion (-€7.3 billion in the year) on track 0.2 transformation journey, necessary IT investments will 2.5 0.3 Enforcing risk discipline to reach Transform 2019 target of €17.2 billion. In be complemented by strong attention to cost, project addition, we target the entirely self-funded run down 2.3 2.2 selection, and project execution. Our commitment to risk discipline is upheld by two of our non core exposure by 2025. critical measures: our strict underwriting policy and a t e 2.9 One of our top priorities is to facilitate the bank’s 2.2 the constant monitoring of our portfolio. Non core evolution Un i e to a 2.4 transformation by redesigning our end-to-end ad oan processes. This will support our customers’ growing We believe strong risk discipline is key to ensuring use of digital channels and further improve their 201 2017 201 201 2017 201 the quality of our loan portfolio; in this effort, our experience when interacting with us. At the same time, we are also using our digitization business and risk management functions are closely Gross Loans, € bn 37.1 29.8 17.2 NPE coverageA cooperating, jointly reviewing the quality of new o/w gross NPE, € bn 31.5 26.5 17.2 Group Core as an opportunity to rethink our processes and loans and our existing credit portfolio. This steers our NPE coverage % achieve greater operational efficiency with a lower, business development activities toward high-quality sustainable cost base. Net Loans, € bn 19.2 exposures and helps to promptly identify areas where 14.6 risk mitigation actions are needed. 7.4 Lastly, we are working to secure the execution of the 54.7 55.4 >51 plan across the Group through disciplined demand Our origination of new loans is strictly controlled management and implementation to ensure that the through the increased centralization and automation NPE coverage Transform 2019 targets are fully achieved within the of our credit processes. Our business functions, which expected timeframe. We are achieving this through are our first line of defense against poor-quality 56.4% 56.9% >57% rigorous monitoring and project management that loans, are equally vital to maintaining the quality of 201 2017 201 closely involves senior management. 7 our existing credit portfolio. In addition, automated Among the decisive actions taken, FINO is the Group Core 42% 43% >39% early warning signals help us to proactively intervene two-phased de-risking project we announced during UTP coverage Overall, implementing a lower, more sustainable Group Core in potentially critical positions and catch severely 2016 Capital Markets Day. We successfully closed Bad Loans coverage 68% 68% >64% cost structure will generate €1.7 billion in net annual deteriorating loans earlier. Phase 1 of FINO in July, selling €17.7 billion of gross recurring cost savings as of 2019, a key part of which A will come from staff expenses (70 percent). We are Commercial anking Italy bad loans to securitization vehicles, with a majority Cost of risk interest in these vehicles then being sold to two Group Core ahead of the Transform 2019 schedule on net Full irst months default rate on ne loans bps % investors. This landmark deal was the largest-ever Time Equivalent (FTE) reductions, with 6,300 units bilateral Non-Performing Loan (NPL) transaction ever decrease in 2017. This allows us to reach 64 percent 1.1 0.9 completed in Europe. of our total target already in 2017. We achieved this 79 while also making targeted hirings to ensure the 0.6 Corporate 0.4 a FINO phase 2 transaction was successfully closed in 43 43 right mix of skills and experience are distributed 0.2 0.2 ine January 2018, completing the sell down of UniCredit’s throughout the Group. Our FTE reduction program is ortgage stake in FINO to below 20 percent. The necessary being responsibly managed with due consideration documentation is being finalised in accordance with 201 2017 201 for all local business requirements and laws. 201 201 regulation and procedures. A. Numbers might not add due to rounding reasons. A. 2016 new lending volumes until November 2016.
7. Refer to the 2016 Integrated Report for more information.
30 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 31 Our Strategy Our Strategy → Strategic Plan → Strategic Plan
r u t n will meet customers’ increasingly sophisticated advisory services, including support from specialists products available within our Credit Revolution MATERIAL requirements and enhance our customer focus. These and experts in areas such as real estate and asset program. Jointly led by business and risk functions, TOPICS developments are making UniCredit into a leaner, management. In addition, this new model has this program is designed to simplify credit processes more efficient organization. enhanced our focus on retail lending. and products and rationalize our IT architecture and platforms. Products provided in this program include The transformation of our distribution model and By enhancing our IT architecture, we are becoming pre-approved lending solutions. sales channels is intended to make our bank more more lean and efficient, while improving the quality of accessible and efficient. While we are optimizing our services and experiences delivered to customers. Automated transactions have grown consistently and now represent 91.7 percent of total transactions. 201 2017 201 footprint by concentrating our presence where our clients are, our network is also adopting new formats IT and digital technologies are a linchpin of our r u that make use of a higher degree of automation transformation. We have adopted a pragmatic The increase in remote sales is largely driven by (e.g., smart/cashless branches in Italy) and are fully approach in these areas, opting to focus on initiatives responsible pre-approved lending solutions and integrated with our remote and digital channels. that enhance customer experiences while investing bancassurance product sales. Currently, we are in opportunities with high potential for success. The focusing our attention on increasing the number of ra e e ter ur e IT investments allocated for Transform 2019 have products available through our digital platform. ranc e been increased by approximately €100 million, to €1.7 In 2017, Commercial Banking Italy rolled out a new billion. client segmentation model to match different corporate clients’ needs and maximize cross-selling opportunities. We have launched new multi-country platforms that This helps us to serve every form of enterprise, with 201 2017 201 provide online and mobile banking services for both a “four plus two” approach to client segments and retail and business customers, and we are working on a dedicated service model for each, extending and We are a simple, successful, pan-European commercial innovative mobile interfaces, such as wallet apps. In applying best practices from within our organization. bank with a fully plugged in Corporate & Investment Italy, we were the first bank to launch payments via Banking (CIB) that delivers a unique Western, Central 201 2017 201 Apple Pay and the first bank to introduce Alipay to Starting from the above mentioned “four”, the new and Eastern European network to our extensive client the local market. client segments are: franchise of individuals and companies; to further drive A good example of this process can be seen in • Large corporates (mid-caps in Europe, large-caps for the transformation of our operating model and maximize Italy, where over the past 12 months we have put In addition, we are working to further improve the Italy), mainly served by the CIB/Commercial Banking the value of our commercial bank, we are committed to: in place new service models for our affluent and quality of our advisory services, providing our network product platform, which focuses on specialization in • transforming our Western European8 commercial small business segments, where some 70 percent with advanced tools to support their interactions with a competitive cost-to-serve environment banking operations to improve focus on customers of the customers are served by both a dedicated customers. • Small businesses with a return on allocated and create a sustainable, lower-cost structure relationship manager and remote services. capital in excess of 15 percent, mainly served by • further strengthening our leadership position in CEE In addition, our dedicated end-to-end delivery unit In Italy, we are continuing to deploy our multichannel a progressive extension of the retail model, but • capturing more cross-selling opportunities through (E2E), which works on re-designing our products and strategy, redesigning the format of our branches. We supported with remote advisory for basic banking an efficient CIB Division that is fully plugged into processes, has already delivered tangible results. The are creating full-service branches, smart branches needs and dedicated business centers commercial banking unit, which was created at the beginning of 2017, and cashless branches to help foster the adoption of • Mid corporates, which are offered leading solutions • maximizing revenue synergies and sharing of best aims to simplify the operating processes of more digital technologies. from our small business segment, leveraging our practices across business lines and countries. than 20 key products. Since its launch in March, the remote and internet banking services unit has been working at full speed; to date, 140 Our new simple yet engaging and secure global • Top corporates, which are served with a more colleagues have logged roughly 14,500 working days internet banking platform, as well as the instant sophisticated and targeted approach, combined Transforming our Western European in the effort to generate innovative product ideas. mobile payments experience we offer through our with dedicated analysis of specific industry needs commercial banking operations wallet solution, are paying off. This work has strongly across their supply chains. The positive results generated by the E2E delivery increased the number of people who use our internet In Italy, Germany and Austria, our core countries unit include the reduction from four to one of the and mobile banking platforms. All of these segments are integrated with the “two” in Western Europe, we have worked to further number of applications used by our relationship sector-focused segments: real estate and public sector. enhance our customer focus while deploying a more managers to open a bank account. For customer Remote sales have doubled since 2015, now accounting efficient, innovative and digital service model with a satisfaction, the unit has developed our new 100 for almost 19 percent of all sales; In parallel, we are developing a new digital sustainable, lower-cost structure. percent self-service card management process, which 34 percent growth in remote sales in the past 12 months. infrastructure to support this new client is available 24/7 on UniCredit’s internet and mobile segmentation model. The increasing use of technology is changing banking platforms. consumer behavior and expectations. Thanks to Further we have incorporated new digital processes, First, we have developed B.Link, a proprietary digital innovation, the number of interactions In Germany, we have launched a new service model such as digital signatures and the SMS/token CRM tool which leverages the Group’s large between customers and banks is rapidly increasing. for small medium enterprise (SME) customers. signature. This has enabled us to digitalize 7.4 trove of data to help relationship managers Consequently, we are designing services to Designed to improve customer experiences, the million contracts, amounting to 37 percent of all provide real time answers to client needs. provide seamless multichannel experiences; this model offers digital solutions and high-quality contracts signed in 2017. We also made more B.Link is a digital workbench with, among other
8. Western Europe includes Commercial Banking in Italy, Germany and Austria.
32 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 33 Our Strategy Our Strategy → Strategic Plan → Strategic Plan applications, portfolio overviews, risk monitoring The transformation of our commercial banking Further strengthening our leadership The region’s innovation, exemplified by the strong MATERIAL TOPICS tools, action planners and pitch libraries. Its operations in Western Europe also implies an position in CEE growth of its digital customer base, makes it advanced commercial targeting capabilities enable updated focus on risk-adjusted profitability. the perfect testing ground for new digital and IT us to effectively deploy our approach to customer UniCredit’s Central and Eastern Europe franchise is solutions. A number of important transformation segmentation by enhancing our interactions with Accordingly, UniCredit is promoting commercial the largest and most diversified in the region. We programs have been launched in CEE, particularly in product factories and facilitating cross selling. offers related to asset gathering in all geographies, provide strong local coverage, with more than 1,800 areas related to innovation and digitalization, which Designed for the digital era, B.Link is smartphone- through the launch of special initiatives for all client retail branches10 across 11 countries, and are one of have been rolled out across the Group. friendly, allowing a relationship manager to use the segments. Our 2017 agreement to sell Pioneer the region’s leading corporate banks. app to contact product specialists. This increases Investments to Amundi presents our Group with the Solid growth of digital users at ~45 percent, our overall commercial efficiency. opportunity to access a wider product catalogue. In line with the Transform 2019 plan, we continued well on track vs. 2019 target of 51 percent. to invest in organic growth in our CEE operations. We Next, we have adapted the front-end of our online In Italy, on the asset gathering side, we have aim to consolidate our leadership in the region, which t e e a g u er banking operations to better fit each customer increased assets under management (AuM), thanks will enable us to further stimulate its socioeconomic Penetrati n segment. We have launched a new integrated also to an expanded product offering following development. Our approach consists of enhancing portal for larger corporate and CIB customers our partnership with Amundi. This performance our capacity to innovate and digitally transforming who request complex products, specialization allowed the bank to increase the weight of AuM our operations. In this way, we can better respond to and quick responses, and are developing a simple products in clients’ portfolios, who benefit from rapidly changing customer needs while maintaining a online banking portal for SMEs. This SME portal an outstanding risk management and investment sustainable cost structure and strong risk discipline. will be introduced in 2018, together with a suite of diversification. value-adding services. CEE will carry on this focus on organic growth, Regarding our advisory services, Fineco is our leveraging client acquisition and value propositions 201 2017 201 Lastly, we are making progress in our efforts to multichannel bank with a cutting edge advisory for multi-country corporate customers. The revenues industrialize mid- and back-office functions through model. By leveraging its best-in-class internal IT trend in CEE is proceeding in line with targets, and our We remain focused on maximizing synergies across the retraining of staff and further digitization. This culture, Fineco is able to allocate assets with an customer base in the region continues to grow towards the Group. Cross-border activity is growing, thanks to will make us more productive and ultimately improve algorithmic/quantitative approach. In this way, our target of 2.6 million new clients in 2019. Moreover, an increasing number of international customers. As the customer experience. its network can dedicate more time to managing our cost income is at 36.9 percent, a very strong sign of December, CEE customers active in more than one relationships with clients, and better understand of our well-established cost savings culture, and we are country where our Group is present had grown by We have also taken steps to accelerate growth by their needs and how they evolve over time, thereby further enhancing our risk discipline, reducing our gross 12 percent from the previous year. introducing products and services with higher increasing the quality of services and the customer NPE ratio from 9.9 percent at the end of 2016 to 7.9 levels of risk-adjusted profitability. experience. percent at the end of 2017. In addition, we have further developed our data analytics capabilities and our advisory tools to We aim to consolidate our asset gathering position, Asset Under Management (AuM) Net Sales in support relationship managers in their work. For reaffirm our leadership in banking and capture Commercial Banking (CBK) Italy reached €11 billion ey target example, our new global transaction banking the full potential of our corporate franchise, while in 2017, three times higher than 2016; 201 (GTB) Spider tool was launched in 2017 to rapidly e e ue progressively reducing our NPE ratio. As with our Net sales of Fineco amounting to €6 billion, up by process large amounts of data and provide a deeper rgani gro t gr t Groupwide commercial banking model, the same 18 percent year on year. understanding of corporate customers’ behavior simple approach will be rolled out to all of our et e in relation to global transaction products in order Inno ation operations in Western Europe. We are also changing our approach to consumer and digita i ation e t to provide our customers with a best in class and finance; with progressive use of pre-approved lending tailored service. Co t a ing plafonds and remote channels, we can be more t e ey arget t re proactive with our clients, employing an approach r 201 Contin o ri supported by quicker response-rates. di ip ine rat
gro t Meanwhile, commercial initiatives were rolled out A. vs. 2015; all 2015 figures are restated assuming new Group perimeter. B. At current FX rate, Constant FX Rate CAGR 3.4%. for foreign subsidiaries of Italian customers, fully C. In 2019. At current FX, 36.3% at constant FX. leveraging our global footprint to increase our new Con er inan e o e gro t international accounts by 11 percent.9
a ine o e gro t
A. Total Financial Assets, excluding market performance and including Fineco.
9. New accounts as of November 2017 compared with the same period of 2016. 10. Including Yapi Kredi (YKB) in Turkey.
34 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 35 Our Strategy Our Strategy → Strategic Plan → Strategic Plan
Capturing more cross-selling provides our customers access to high-value-added Maximize synergies and best practice sharing opportunities through an efficient products and services, enabling them to access COMMERCIAL CIB Division that is fully plugged into capital markets and advisory for financial risk and BA I G CB Corporate I Private Retail Commercial Banking liquidity management. MATERIAL Ita Adopt lean but strong TOPICS Over the past few years, our CIB Division has been The third and final step of the strategy, which is in significantly reshaped and simplified to establish a line with both our efforts over the past few years corporate center er an common culture and strong risk discipline. and our Transform 2019 plan, is to deploy strong cost and risk discipline to enable CIB to grow. We have taken several important steps to create COMMO C LT RE Ri di ip ine and tria a strong steering center that can firmly guide our ESTABLIS ED CoR ta i i ed There is a considerable foundation to build on, as various divisions and business lines. At the same ine ode CIB leading position among European financial time, we are implementing measures to reduce the SIMPLI ICATIO adaptation institutions is recognized in multiple league tables. C impact of our corporate center in terms of costs.
Rig t i ing o t e organi ation REI ORCED • n.1 by number of transactions both in EMEA Bonds in Reduction of eight of Group Corporate Center CLIE T RA C ISE enior an er ode EUR and Combined EMEA Bonds and Loans in EUR CORPORATE on total costs ro ed o t in ore o ntrie • n.1 in Syndicated Loans in EUR in Italy, Germany, International I ESTME T Weight of Group Corporate Center on total costs, B SI ESS % on ore a et Austria and CEE as well as in EMEA Covered Bonds11 clients BA I G CIB RE OC SI G ring en ing and r n o • n.2 in Combined EMEA Bonds and Loans in EUR • n.2 in EMEA Bonds in EUR. Thanks to this effort, CIB is now fully plugged Another opportunity for greater synergies is available in our Commercial Banking Division and is an in the service we offer to international customers, established leader in our core geographies, Moreover, it is recognized as a leading player in in the form of cross-border support. We are working serving multinational corporates and key financial Europe, as confirmed by several awards it received to increase the cross-border business generated 201 2017 201 institutions, delivering services to corporate and in 2017, such as Best Global Trade Finance by CIB and international corporate banking clients public sector clients and offering investment Provider for All Services, Products/Payments across our 14 European core markets and across our In July 2016, UniCredit decided to strengthen the role solutions for 25 million retail and private banking and Overall Executions (Euromoney Trade international network. To support this opportunity, of the General Manager, expanding responsibilities clients. Finance Survey 2018). our newly opened branch in Abu Dhabi is equipped to cover all business activities. This includes, among to serve more than 1,000 European companies other items, our CIB and CEE divisions as well as all Our next step is to consolidate and improve operating in the Middle East region. operations in Italy, Germany, Austria. This represents CIB’s market-leading position by building on our Maximizing synergies across the an important step toward expanding UniCredit’s strengths and further expanding our leadership Group We have identified a third opportunity for client offering and maximizing cross-selling and into areas such as global transaction banking and synergies – between our corporate, high net value creation across the entire Group. It will also debt finance. To achieve this, we will leverage our UniCredit has significant potential to promote worth individual / private and retail services – and better enable us to implement our digital strategy international network and clients while ramping synergies across business lines and countries. With have implemented initiatives in every country to and make changes to the bank’s service model. up our market capabilities for the benefit of our our One Bank, One UniCredit approach, we are maximize cooperation and share best practices in This is part of an overall transformation in which corporate and financial institution clients. So far, working to take full advantage of every opportunity this area. IT simplification, back office streamlining and real such actions have already enabled 75 percent of by leveraging Group-wide best practice sharing estate optimization are changing the DNA of our CIB’s total revenues to be client-driven, and we aim platforms to better serve our customers. Groupwide, we continue to work on the culture, costs and structure. to increase that figure to 84 percent by 2019. With the objective of maximizing synergies across the optimization of our product and investment Group, we have deployed several different business platform, which will enable us to generate more With a simplified organization and a strong We are also working to enhance Group synergies initiatives. synergies among business segments. All of these management team, we are fully committed to by strengthening cross-selling. Our joint venture opportunities for greater cooperation across the implement Transform 2019. We have established a between CIB Division and Commercial Banking As previously discussed, we have greatly increased Group are fostered through our Best Practice strong governance and monitoring framework to enable Italy, which was also discussed in the 2016 cooperation between CIB and Commercial Banking Sharing12 Program, both between divisions and us to achieve our targets and objectives, overseeing 18 Integrated Report, integrates our traditional to capture more cross-selling opportunities. In this countries. Groupwide projects based on three core platforms. corporate customers offerings with a wider range approach, we introduced dedicated cross-selling of products and services that enable them to take committees in all Group geographies. These advantage of structural changes in the financial committees involve key representatives from both markets. This client-centric approach benefits the Commercial Banking and CIB activities. To further from direct senior management involvement, fully boost this effort, we have introduced cross-selling coordinated commercial activities, and an aligned targets within the key performance indicators (KPIs) of incentive system. Its customized service model our managers.
11. Source: Dealogic, as of 5 Jan 2018. Period 1 Jan – 31 Dec 2017; rankings by volume unless otherwise stated. 12. Refer to the Intellectual Capital chapter for more information.
36 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 37 Our Strategy Our Strategy → Strategic Plan → Strategic Plan
Divisional KPIs MATERIAL These platforms are: e t e e e ut a g er a e t e TOPICS • the IT demand platform, which is ensuring tra r at r gra discipline and the optimization of IT investments t t while supporting our transformation by allocating e e ue e r ra e n p n n resources to the most impactful initiatives at a e • the finance platform, which is serving as the 7
authoritative source for all revenue and cost a a e t a ue reat 201 1 7 0 figures, enabling us to consistently track progress O Business profitability toward our strategic plan targets. It is also including all P&L items ensuring that overall performance management 2017 2 is based on our steering managerial KPIs a ta g er a e • the human resources platform, which is tracking rat Focus on capital strength progress toward our targets and drive forward 10 u y a e 201 2 00 people engagement, talent development and training activities. e u e Quality of new business 201 1 Regular monitoring of the implementation of our er r g Risk dynamics of transformation programs is carried out at weekly t performing credit portfolio or monthly steering committee meetings focused on the status of specific work streams with pillar r Development of 2017 1 1 sponsors, program owners and, when required, non-performing credit CEO and General Manager. There are also regular portfolio monthly Transformation Jour Fixe involving the 201 1 1 CEO, the General Manager and the sponsors of a a Liquidity position e t u e the five pillars and program owners to update on the plan developments. These measures u tr a r er a e t 2 promote accountability and help drive the Group’s 201 7 1 1 transformation forward. O e Cost-efficiency developments vs. targets 21 - 11 Transformation Jour Fixe in 2017 2017 7 12 r e g Cross-selling effectiveness - roughly 180 Steering Committes, covering all pillars. across business lines and countries Managerial KPIs, which are uniformly applied 2 201 1 12 across the Group, are fully aligned with our overall et e e t ew client origination Group Risk Appetite Framework and tightly linked to our incentive scheme. These KPIs have been 1 disseminated to every division and business line. 201 1 1 01C A. EL stands for Expected Loss.
2017 1 C
201 102 1 C
7 201
7 2017 22
7 201 21
A. Excluding intercompany and repos. B. Retail only - excluded minor premises, corporate and private banking. C. Including Turkey at 100 percent.
38 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 39 Our Strategy Financial Capital → Financial Capital
Solid Equity Position MATERIAL TOPICS Financial resources obtained from external providers and generated by our bank’s activity, Net Profit / Loss Total asset Cost / Income 1 that are used to support clients’ business and bank operations for the medium-long term. n n 4.7 859.5 836.8 O S OC S OF C 57.9
2017
O SO C F C OS O F S <52
-11.8 201 2017 201 201 2017 201
Balanced funding mix
Funding mix by source 2017 Funding mix by country 2017 CO C S ri ate a e ent Ita d er an an Capita ond tria pranationa nding C et or ond i ar et S O O and t er o e a e O i e tor ortgage Co ered ond
C S O Long-term financial stability CO O S
Cost of risk Common Equity S O p Tier 1 ratio Ratings FO CO O Fitch Moody's Standard 2017 Ratings Investors & Poor's Service
C 13.60 ort ter de t F2 P-2 A-2 2017 edi and Baa1 ong ter
>12.5 O S tand one Rating bbb ba1 bbb • Contin e to i pro e a et a it 201 2017 201 201 ata a at e r ar 201 • Cost discipline and efficiency measures to reduce cost income ratio and transform business processes
1. Financial data corresponds to information in our 2017 Consolidated Reports and Accounts. When not applicable, management data is used. For additional A. Cost of risk adjusted for -€8.1 bn non recurring LLP in 4Q16, related to Transform 2019. information on Group results, refer to the 2017 Consolidated Reports and Accounts and to the Presentation on 2017 preliminary results available on the B. Original target for 2019 was 49 bps. Delta given by line adjustments for accounting changes on: NPEs time value accounting, NPEs accrued interest, investors section of the Group website. Refer to the Strategic Plan section for more information. reclassification of customers loans. C. Fully loaded CET 1 ratio, 13.02 percent pro forma of IFRS9 and FINO.
40 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 41 Our Strategy Human Capital → Human Capital
Over the course of 2017, they participated in MATERIAL Engage colleagues meetings with their first line of managers to initiate TOPICS the process of sharing this information with the rest We listen to our people, and we work to thoroughly of the employee population. We support our colleagues throughout their professional lives by listening to their communicate our Group strategy, performance and needs, valuing their skills, implementing training programs and development plans, and results to them, in recognition of the crucial role they Furthermore, our CEO and other senior managers promoting diversity, inclusion and work-life balance. play in all of our activities. informed employee representatives about the status of the strategic plan’s implementation during the biannual meetings with the UniCredit European O S OC S O C Listening to our people Works Council. These meetings provided an occasion to address topics of particular interest to employees Co eag e in ited and to engage in a constructive social dialogue.1 to t e 2017 People Survey We also determined it was important to recruit CO S engaged colleagues to act as ambassadors, who S Re pon e rate CO S O O C could explain our Group’s transformation journey. O SS O S So, we established a community of 500 ngagement in e transformation agents in the Italian commercial 201 201 2017 network, in direct communication with leaders to promote change and mobilize action towards our strategic plan targets.
Co eag e ee engaged S S o t o in t eir o pan engage ent inde training o r per apita The results of our People Survey, a recurring listening int e larati n n r i e alan e igned it t e ropean or Co n i Enhance competences initiative carried out by UniCredit since 2003, exhibit the engagement of our employees in our enterprise. We are committed to being a company where people The 2017 survey, held in November, measured our can fully deploy their skills, abilities and personal overall engagement at 75 percent, the same as the assets. We invest in attracting, managing and CO C S previous year. This indicates that our people are developing talent and seek to be an employer of H S aligned with UniCredit’s goals and values, and that choice. O O C there is a high level of acceptance of the changes associated with the Group’s ongoing transformation. Recruiting talent H C O S C S O Communicating our strategy To guarantee sustainable support for the transformation and involving our people in it and digitization of the Group, we continue to invest in the best available talent in our markets. In 2017, we focused our internal communication efforts on conveying results and key performance A global policy is in place to regulate the selection O indicators (KPIs) related to the execution of process for all types of jobs at the Group, from O O S S our strategic plan. Our goal was to inform our entry level to executive. This ensures a single, colleagues about our progress and foster pride and clearly structured hiring process. In every case when a sense of belonging. Relevant content on our Group a vacant position needs to be filled, an external intranet included videos from our CEO and other recruiting process is activated only when it is senior managers. These received up to 48,800 page impossible to fill it using internal resources. views, and the results from instant polls confirmed the readers’ substantial interest in this topic. We continue to offer opportunities for personalized development to recent university graduates: in 2017, Senior management has also participated extensively through our Impact International Graduate Program, O S in the effort to explain and disseminate the plan’s key we hired 56 promising recent graduates of eight achievements and messages Groupwide. different nationalities and an average age of 25. • rt er pro otion o a po iti e or ing en iron ent or o eag e pporting or i e a an e • n an e ent o di er it and in ion initiati e 1. Refer to the Supplement – Human Capital section for more information.
42 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 43 Our Strategy Our Strategy → Human Capital → Human Capital
Managing performance The Future in Talent program is designed to identify Promoting gender balance MATERIAL promising employees and to accelerate their growth TOPICS The UniCredit Competency Model describes the with learning and development opportunities. Its Our Group remains committed to achieving more At both global and local levels, UniCredit is behaviors, based on our Five Fundamentals,2 first exploratory phase was completed in Italy in gender balance in our leadership. encouraging initiatives and best practices to balance expected from all of UniCredit’s people. All our December, and 370 colleagues were identified. the situation where needed. employees receive a performance review from The program will be rolled out at the Group level UniCredit’s workforce is 55 percent female. In 2017, their manager, which assesses their performance in 2018. the execution of our strategic plan, which decreased In 2017, we continued to carry out awareness- and skills and identifies learning and development the overall employee population and divested several building activities on this topic at all levels of the opportunities. In 2017, we offered professional growth in specific companies that have high rates of female employees organization. competence and business lines, using the modular (such as Bank Pekao), resulted in a decrease of Career development decisions and compensation and flexible format of our functional academies in women across different managerial levels in the allocations are based on structured processes fields such as Risk, Compliance, HR and Audit.3 Group. for non-executives, executives and executive- track colleagues alike. They are based on several In addition, training opportunities specific to local Since 2013, we have maintained a Global Policy on FOCUS key principles: accountability and empowerment business needs in each country and division were Gender Equality. Improving work-life balance of managers to make decisions about their provided throughout our Group. We are committed to promoting work-life balance people, rewarding merit and performance, clearly Our approach is based on four main pillars: clear and inclusion in order to achieve an engaging work differentiated appraisals, appropriate rewards A total of roughly 24 training hours per capita governance and accountability, with ownership environment and be an ideal place to work. and career development opportunities, increasing in 2017 testifies to our investment in professional decentralized to business leaders; measurement that transparency and fostering a culture of constructive skills development. makes it possible to monitor progress; training, to In November 2017, our Group signed a Joint feedback. increase awareness; and dedicated processes that Declaration on Work-Life Balance4 with the European support our leadership pipeline. Works Council. The declaration defines global We also have a strong leadership pipeline for guidelines and principles to promote work-life executives at our Group, as a way to ensure UniCredit’s The policy sets out principles and guidelines to balance initiatives across the Group, with an eye long-term sustainability. In 2017, as part of our effort Value diversity ensure a level playing field where all employees, to continuous innovation and the development of to strengthen the One Bank, One UniCredit mindset, regardless of gender, can realize their full current best practices. It establishes a basis for we identified a pool of potential successors for and inclusion potential. Our gender equality guidelines apply to concrete implementation in all countries, in keeping each executive level, on the basis of clear, inclusive company processes and practices in the areas of with the respective national legal requirements and and transparent criteria, such as: performance and We have a richly diverse workforce, and we are recruitment and internal appointments, professional labor conditions. potential evaluation; championing one or more of our committed to an inclusive working environment development, remuneration, work-life balance, Five Fundamentals; relevant technical and functional where all of the talent, skills, experiences and information and education. The policy also outlines A number of common drivers and actions have been skills; readiness; cross-functional and international perspectives of our people can be fully expressed. the roles and responsibilities for its application, and identified to inspire initiatives in specific countries, experience. requires the regular tabulation of a dashboard of KPIs encouraging social dialogue on the main aspects Our r r e measuring gender diversity in our Group. of the declaration. These include: flexible working solutions, measures to maximize the quality and Developing people y gen er UniCredit is committed to equality in pay regardless effectiveness of time spent at work, and measures to of gender, consistent with the policy and the Group improve colleagues’ well-being. We design initiatives that address the professional Compensation Policy. growth needs of colleagues and ensure they can e a e a e The key features of the declaration build on the support UniCredit’s transformation objectives. Senior management monitors the annual progress principles of respect, equal opportunities and of UniCredit’s Gender Balance Program and the non-discrimination, already addressed in previous For current and future Group leaders, the Leadership indicators related to its effectiveness, such as the joint declarations.5 Curriculum provides a global dedicated learning y age presence of women across different levels of the environment to advance their leadership skills company and gender pay gap. and their ability to play key roles in our business transformation. In 2017, we partnered with top-tier o e 0 ear et een 1 0 ear business schools to offer these leadership programs to 520 colleagues from 17 different countries.
To enhance the way talent is identified and nurtured within the Group, in 2017 we designed a new program that deploys a data-driven, meritocratic et een 1 0 ear Up to 0 ear and transparent approach.
2. Refer to the 2016 Integrated Report for more information. 4. Refer to Joint Declaration on Work-Life Balance on our website (www.unicreditgroup.eu) for more information. 3. Refer to the Risk Management and Compliance chapter for more information. 5. Refer to the Supplement – Human Capital section for more information.
44 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 45 Our Strategy Social → Social and relationship Capital and relationship Capital
MATERIAL Close relations with our main stakeholders create long-term value and support individual Our approach to social Country Priorities TOPICS and collective growth. and relationship capital High Medium Low Indicator ITA GER AUT CEEA O S OC S O C The viability of our enterprise depends on our ability to sustain strong relationships with customers and the Ease of access to loans wider community. In our approach, we aim to improve how people live and enterprises operate, creating Availability of financial value by identifying new business opportunities and services O SOC providing significant competitive advantages. S O CO O C Venture capital availability O S S O UniCredit’s products and services are designed to Employment rate support the well-being and competitiveness of the of people 20-64 years countries where we work. To ensure success, we People suffering poor measure the benefits we have generated for third housing conditions parties at either the individual or the country level.1 Quality of overall Often, we are able to generate direct benefits. This infrastructure S S is evident in our assessments of local infrastructure, Percentage of young ore than eed a pro ided ta e o der housing quality, venture capital availability, individual people not in education, employment, or training illion ontri tion to o nitie level of education, financial availability and ease of access (NEET) to loans. We also contribute to job creation, increase the ability to retain and attract talent, and improve Percentage of people participating in formal or living standards by fostering the competitiveness of non-formal education companies. These benefits demonstrate we have an CO C S essential role in sustainable development. A. CEE includes: Bulgaria, Croatia, Hungary, Romania.
SOC Our in est ents to de elop our Social and relationship Capital
O S O SOC CO O C O S S O SOC C S O O C S O S C C S O oo and anne to dia og e and intera t Offer of financial products/services for indi id a and o panie n an ed or C S O S S C O CO S CO SS it to er U e o to er eed a to in rea e a it nder an ed o prod t and er i e Programs to increase financial literacy
C O S O O S SOC C S O ngoing engage ent a ti itie it e terna ro otion o ndrai ing a ti itie ta e o der a in e tor ana t pport to o ia enterpri e on er a o iation and reg ator C t re pro otion in a it or
S O O CO O CO S OS et or ing initiati e O S Credit initiati e t ro g p i pported progra • ine t ning o et odo ogie to interpret to er eed a and i pro e to er e perien e Support to enterprises specific sectors • rt er en an e ent o o r o ia i pa t apa i itie CU R IR I
1. Refer to UniCredit Evolution Economy methodology for more information (https://www.unicreditgroup.eu/en/a-sustainable-bank/evolution-economy.html).
46 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 47 Our Strategy Our Strategy → Social and relationship Capital → Social and relationship Capital
This KPI provides: In Austria this year, in response to more than 25,000 Interacting with stakeholder groups MATERIAL Invest in long-term TOPICS • a clear and comparable view of customer and brand customers complaints received during 2016 about stakeholder experiences across countries and segments technical issues that were hampering the use of the We are committed to consulting with our key relationships • a balanced comparison of customer perceptions self-service devices present in all branches, relevant stakeholders – including investors, regulators and of UniCredit and its competitors, obtained through departments immediately cooperated to address local consumer associations – through a variety research that is in line with the practices of Fast the matter. Their solution was to involve 150 branch of communication channels. We communicate Engaging with stakeholders is essential to building Moving Consumer Goods (FMCG) companies colleagues in dedicated training sessions and hold through our corporate websites, annual reports trust and making well-informed decisions that create • a clear view of our customers that we can respond bi-weekly meetings with IT colleagues to track and social media platforms; we participate in value for all. to rapidly. improvement of the systems. This allowed, during meetings, forums and other events; we carry out Our top priority is to serve our customers the very 2017, to have a reduction of complaints on this issue numerous consultations and surveys. best we can. Customers are our lifeblood, the reason In addiction, UniCredit utilizes big data and artificial of 25 percent. our Group exists. intelligence to obtain solicited and unsolicited In 2017, this engagement included 591 meetings3 opinions from customers. This includes: In Croatia, we continued to improve our service in and 62 roadshow days with more than 1,800 • instant feedback - Each local UniCredit entity 2017 by replacing 78 ATMs that were the source of institutional, retail and socially responsible Engaging with our customers has developed its own procedures for gathering the majority of complaints by various businesses. investors. feedback after key customer interaction Customer feedback also helped us to continue to We engage with our customers in different ways • online monitoring - UniCredit has a procedure for optimize our internet (e-zaba) and mobile (m-zaba) One of our largest events took place on with the object to increase their overall levels of identifying and assessing what is being said about the banking services. By issuing updates for e-zaba, December 12, Capital Markets Day, when our satisfaction. Through this ongoing outreach effort, Group on social media and elsewhere on the internet. we ensured companies could smoothly use it with Group CEO and top managers presented the we are working to provide them with exceptional new browser and Java software releases while also targets and achievements of the Transform 2019 service. Groupwide, our complaint management systems enabling individual users to carry out convenient FX strategic plan. enable us to identify sources of customer concern payments and withdraw funds. In 2017, we drew on years of insights and as per and promptly resolve them to their satisfaction. Our engagement with regulators extended our last years’ declared priority we worked to throughout the year, at the national, European produce UniCredit’s Benchmarking Study, which In 2017 in Italy we decided to revamp the card and international levels. This dialogue, primarily FOCUS delivery process, drastically improving efficiency provides an objective view of how our customers Social Caring involving the provision of feedback on proposed and prospects perceive UniCredit’s local banks and precision of delivery. Two months into the regulatory changes that would impact our Customers can directly interact with us using not and their relationships with these banks. This implementation of the new process, we had soon business, places us in a better position to leverage only traditional channels, but also social networks study developed the Customer First Index (CFI),2 recorded a sharp reduction of the rate of non existing and future opportunities for growth. As in such as Twitter and Facebook. In order to understand a key performance indicator (KPI) that calculates delivery of cards. 2016, we continued to work with regulators and and anticipate customers’ needs and respond to customers’ overall satisfaction with the bank and In 2016 this represented a critical point where we supervisors on the Basel IV package, seeking the them with customized answers, we offer a social assesses what they prefer about UniCredit versus recorded an increased number of claims and requests implementation of less restrictive requirements caring service in the majority of the countries where other banks. for assistance related to delays and unreceived cards. that would ensure, to the extent possible, a level we are present: customers can post comments or playing field across jurisdictions for all financial send private messages to request information or institutions. roup sta eholder integrated listening assistance, and, through direct forwarding of their interactions to our customer care offices, we ensure UniCredit’s engagement with the European Central a high speed of response. This also helps us by Bank (ECB) and other European institutions in 2017 providing a prompt assessment of how customers C S lo al mostly concerned the Group’s legacy NPLs. rand rep tation and C to er ati a tion r e perceive our offers and services and a greater insight After a short consultation period, the ECB o i ited into specific issues that can support our business. published its guidance to banks on NPLs; several ight diagnostics 2017 highlights in Italy: proposals on policies dealing with inadequate - about 460,000 fans on Facebook and over 26,000 NPL provisioning are still being discussed. In these followers on Twitter discussions with regulators and supervisors, we O O O C - over 29,000 managed requests on the 2 channels aim to mitigate the impact of proposed measures OC SS S S O - 100 percent of questions answered on our customers. C S O - average response time of one and a half hour CO S (Facebook channel). Un o i ited Un o i ited o i ited O O S In tant eed a i ter opping C o e t e oop ocal
Social and econo ical trends
2. Refer to the Supplement - Social and relationship Capital section for more information. 3. One-on-one and group meetings, conference and video conference calls and meetings with rating agencies (39), buy-side (530) and sell-side (22) investors.
48 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 49 Our Strategy Our Strategy → Social and relationship Capital → Social and relationship Capital
MATERIAL In response to increasing requests by investors for initiatives and attracted about €1.8 million in Their participation drew attention to the 17 DISABLED TOPICS greater transparency, more stakeholder engagement additional support for the initiatives from third parties. Sustainable Development Goals and helped raise and stronger sustainability management, we awareness of the United Nations’ 2030 Agenda. Austria: more than 120 shuttle rides to are maintaining an ongoing interaction with ercentage o co unity branches were provided to mobility impaired sustainability rating agencies. contri utions customers. Fostering financial inclusion niCredit sustaina ility ratings y geography million UniCredit works to promote stronger economic We also continued to engage in a range of financial total sustainabilit score participation. We believe that by making it easier education programs in 2017, targeting several percentile for people to access financing, we can help reduce demographics.5 Ita poverty and stimulate community progress. er an About 78,000 participants6 involved in financial tria We offer a broad range of customized solutions to education training sessions in 2017. C F enable individuals and businesses to gain ready access per ormance on a nine di erent classes scale to financial products and services – whether for Face-to-face training sessions were held throughout A. Data refers to cash contributions only. personal projects or important business activities. At the year. In Italy, our In-Formati program involved roughly B. Includes also UniCredit Foundation and UniCredit & Universities the same time, we are strongly committed to helping 36,000 participants (individuals and companies) in ana ement Climate Chan e Foscolo Foundation. citizens and entrepreneurs improve their personal almost 1,000 training sessions, focused on banking and C D financial skills so they can overcome the financial financial topics such as new business creation, digital per ormance band ran ed on a scale y ocus challenges they face and we can help making a positive payments and logics behind creditworthiness. Of these, million impact on the financial stability and prosperity of the about 13,000 students took part in #cashlessgeneration2, rt C t re As a Group operating in 14 countries, we must communities we serve. Following are a few examples of a financial education path supporting the alternating understand the broad differences between our o ia e are the solutions we offer in our countries. of school and work realized in collaboration with stakeholders. To expand our knowledge, we constantly ono i Associazione Difesa Orientamento Consumatori (Adoc), e e op ent perform studies in cooperation with local consumer d ation YOUTH partner of the Noi&UniCredit program and focused on associations. This is why this year in Italy we renewed and o ng peop e topics as payments and video communication. t er pportC the longstanding partnership Noi&UniCredit with 12 Italy: more than 4,000 Carta Flexia credit cards consumer associations. Moreover, we collaborated ea t n iron ent Our financial education workshops also continued in ergen re ie with a 40 percent discount on the annual fee with the Unione Nazionale Consumatori on a survey Germany, where since the beginning of the initiative A. Includes Group cash contributions and for Italy, Germany and Austria were offered to customers aged 18 to 30 of consumer sentiment in Italy; the survey focused only time, in-kind resources and management costs. Management costs Germany: more than 9,000 customers under 26 in 2013, about 3,400 participants have attended on consumer knowledge of and interest in banking are attributed proportionally based on contributions by focus. 176 sessions to gain basic financial knowledge and B. Numbers might not add due to rounding reasons. took advantage of the free-of-charge StartKonto and finance. After conducting more than 700 online C. "Other support" refers to activities that cannot be classified. Bosnia and Herzegovina: the new Modula help them search for their first jobs. We continued to interviews, the survey confirmed that respondents package account was launched in October; support German startups and young entrepreneurs are still interested in gaining more financial education through the BayStartUp program, which offered y type more than 3,000 young people benefited from and deeper knowledge of our bank and its products, training to roughly 7,000 participants in 74 million a completely free bank account. particularly in regards to savings and investments (79 workshops in the 2017 edition. percent of respondents). Ca ELDERLY We offered financial education programs to Austrian i e youths in the last school year. In Austrian schools, we anage ent o t Bosnia and Herzegovina: 195 customers over held 377 workshops in partnership with the Austrian Invest in social and In ind 65 took advantage of the new Modula package, National Museum of Social and Economic Affairs. customizing it to their needs and preferences These workshops taught almost 7,000 teenage economic development students how to manage their money responsibly. A. Includes Group cash contributions and for Italy, Germany and Austria Bulgaria: over 3,800 pensioners benefited from only time, in-kind resources and management costs. the Golden Age loan; through its quick and easy We do our best to support the growth of our application process, around €4.6 million were In March and April, 43 branches in Croatia hosted communities, finding new ways to serve our As partners in the Italian Alliance for Sustainable made available in 2017. 3,500 students in 70 special workshops on how to individual and corporate customers. In addition to Development (Alleanza Italiana per lo Sviluppo save money for the future. our traditional banking activities, we implement Sostenibile, or ASviS), an Italian network dedicated corporate citizenship and philanthropic initiatives to sustainable development, we contributed to LOW-INCOME INDIVIDUALS AND FAMILIES Making use of new technologies, our financial education that support financial and social inclusion. organizing the first Sustainable Development Festival. programs were also conducted via digital channels. The festival, consisting of more than 200 events In order to comply to the EU Directive 2014/92 In 2017, we contributed roughly €38.1 million4 to throughout the country, saw the participation of on basic payment accounts, UniCredit’s Within the offer to companies in Italy, about 2,400 communities. Through our strong local presence, over 160 civil society organizations and 60 Italian offer includes accounts free of charge or at entrepreneurs have been involved in training we also engaged colleagues in these community universities in panels, workshops and discussions. a reasonable fee, that allow advantageous initiatives. Of these, around 2,200 took part in the conditions for vulnerable customers. new UniCreditTalk, discussions between banks, 4. 2017 data are based on internal cost management data sources. Roughly €36.8 of total contributions Groupwide are measured by the London Benchmarking experts and entrepreneurs, evolution of the web Group model (LBG), in addition to the value of employees’time, in-kind resources and management costs referring to Italy, Germany and Austria only. Aside from contributions tracked using the LBG model, total contributions to communities include an additional roughly €1.3 million for business initiatives that 5. Young people, the elderly, families, small and medium enterprises (SMEs). foster mainly economic development in our territories. 6. Participants include individuals and companies.
50 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 51 Our Strategy Our Strategy → Social and relationship Capital → Social and relationship Capital
2017 edition key numbers: MATERIAL seminars realized in the last years as part of the SOCIAL ENTERPRISES Supporting competitiveness and TOPICS - 1,129 one-on-one and Group meetings held Go International! program. The 2 talks realized in contributing to community growth 8 - 135 delegates representing 55 listed companies 2017 have been an opportunity to discuss new 2017 activities - 81 percent of the companies participated with at challenges raised by digital revolution, their impact - more than €1.5 million investments Interacting continuously with the operating environment least one C-level delegate on organizational and business models and on export - programs running in 6 countries in cooperation and community at large offers indisputable benefits to - 161 fund managers from 14 different countries. management processes. However, during the year with 21 partners from non-profit sector a company and its stakeholders. It makes it possible to Go International! continued with its traditional offer 2017 results8 understand the urgent needs of communities and meet of seminars for entrepreneurs and export managers, - over €1 million provided through 54 grants for them with appropriate initiatives. For UniCredit, this kind In Bulgaria, SME Corner continued to serve as a focusing on topics such as export management, new social enterprise projects of interaction enables to develop products and services unique B2B initiative that provides specially designed technologies and digitization. - roughly 1,900 training and mentorship hours that serve stakeholders and encourage a balanced, spaces where small and medium enterprises (SMEs) provided collaborative approach to well-being, prosperity and and corporate clients can display their products and In 2017, our educational portal euro.de in Germany - 41 businesses started or accelerated, mainly in the growth. Our Group remains focused on understanding services. In 2017, about 140 clients have displayed registered almost 29,000 visitors interested in agro-food, services and environment sectors the daily needs of stakeholders and meeting them their goods/services in the initiative, including 10 financial basic knowledge as payment transactions, - 141 jobs created. effectively, while also helping solve urgent national corporate customers. borrowing, retirement planning or real estate finance. challenges. When we identify business opportunities, we directly CULTURAL SUPPORT In Italy our networking initiative Territorial Advisory support their financial viability and actively cooperate Encouraging social inclusion Boards provide advice related to UniCredit’s seven with national, international and European institutions Supporting talent Italian regions. Appointed by UniCredit’s Board of to make sure SMEs receive the available public funds Every year, the UniCredit & Universities Foscolo Continuing from previous years, in 2017 we worked Directors, the Territorial Advisory Boards provide that have been earmarked for them. Our Group’s Foundation9 offers scholarships, fellowships and to improve the social welfare of our territories. inputs and feedback to the top management and long-established expertise in handling state- and grants to talented students and researchers. Our efforts included the promotion of fundraising regional managers, helping them define their EU-supported programs provides customers with a UniCredit has contributed over €12.3 million activities, support for social enterprises and support business strategies and development plans in their boost in a number of areas. since 2009 to the foundation’s programs, for the dissemination of culture in all its forms, in respective regions and to strengthen UniCredit’s local supporting about 600 beneficiaries. Along with the belief that this works as an engine of social and reputation. In March 2016, the European Central Bank announced last years’ initiatives, the UniCredit International economic development. a new series of targeted longer-term refinancing Internship Program offered 30 undergraduates Another initiative, Forum dei Territori organizes annual operations (TLTRO II) to reinforce its accommodative a three-month internship at UniCredit offices meetings between our senior managers and our main monetary policy stance and foster new lending to the FUNDRAISING ACTIVITIES outside of their home countries local stakeholders so they can discuss priorities and real economy. In March 2017, our Group made use of Employees Promoting cultural initiatives projects that have been selected and designed by the this measure, approving a new drawdown of €15.5 Gift Matching Program7: in the 15th edition of Through our long-standing partnership with the Territorial Advisory Board. Seven of these events were billion. This led us to grant about €1.9 billion in new this UniCredit Foundation initiative, over 8,400 Filarmonica della Scala, in 2017 we supported a held in 2017 and welcomed around 1,400 participants. credit lines from our loan stock of over €7.5 billion. donations made by colleagues involved; around range of inclusive initiatives Open Filarmonica, €2 million donated; more than 330 non-profit that enrich the season at Teatro alla Scala and the Moreover, in Italy, Forum delle Economie hosts In 2017, UniCredit made significant use of the Fondo organizations projects supported international tours: workshops that focus on a specific economic sector Centrale di Garanzia in Italy, to facilitate low-risk - Sound Music!: more than 1,000 young students of interest to UniCredit’s managers and main state-guaranteed loans for about €2.5 billion. More Earthquake in central Italy: this year, we engaged in musical workshops at school and stakeholders so they can discuss trends and potential than €1.2 billion of these funds were made available continued to provide aid to people affected by attended 2 final performances at the UniCredit opportunities to cooperate within that area. These to the corporate segment. Using the fund’s special the devastating 2016 earthquake in central Italy. Pavilion; a third performance was dedicated to meetings, are intended to strengthen the bank’s microcredit section UniCredit facilitated loans for Through an online auction of pieces from the children and families of Milan position in the chosen sector. about €4 milion to SMEs, independent professionals, UniCredit art collection, we raised more than - Concerto per Milano: the annual free concert and new entrepreneurs with new ideas, skills and €70,000 in donations from colleagues to the in Milan’s Piazza del Duomo was attended by At UniCredit’s Italian Investment Conference, talents. areas of Italy that are still recovering from the around 15,000 people we provide listed companies with the opportunity to natural disaster - Prove Aperte: in a cooperative program with meet members of the international financial community. The Fondo di Garanzia’s tranched cover, Bond del the UniCredit Foundation, 5 open rehearsals Each year, more than 160 international institutional Mezzogiorno, was used by UniCredit in 2017 to Customers at the Teatro alla Scala were attended by investors take part in the conference because it allows provide more than 130 loans amounting to over €26 Universo Non Profit: 1,784 Conto Donazioni more than 9,700 people. The net proceeds them to more closely evaluate Italian listed companies. million in guaranteed financing. accounts raised about €1.7 million; 1,459 of nearly €120,000 were donated to local Over time, the event has become the main cross-sector organizations present on the platform, ilMioDono.it; non-profit organizations that provide support for conference in Italy for the Equity Capital Market. In 2017, Beni Strumentali Nuova Sabatini enables UniCredit to over €171,000 raised for 599 of those organizations underprivileged youths in the Milan suburb. the entire conference – including key note speeches, support new investment in Italian companies by helping round tables and workshops – was held at UniCredit them obtain subsidies through the Ministry of Economic In October, the UniCredit Pavilion hosted the UniCredit Card E: over €1.5 million collected via headquarters in Milan. The two-day event builds stronger Development for the purchase of capital goods. This third edition of the Festival Internazionale del around 245,000 cards in circulation. personal relationships between clients and senior facilitation process has been extended until all available Documentario – Visioni dal Mondo, Immagini dalla bankers, global account managers and those responsible resources has been disbursed. In 2017, UniCredit used it Realtà, which featured 28 documentaries on current for various business areas. to provide over €142 million to 650 companies. 7. Refer to the 2017 UniCredit Foundation Report for more information. issues such as immigration, domestic violence, eating 8. Data refer to UniCredit Foundation. disorders, war, the environment and cybersecurity. 9. Refer to the UniCredit & Universities Foscolo Foundation website (www.unicreditanduniversities.eu) for more information. The three-day event was attended by 3,000 people.
52 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 53 Our Strategy Our Strategy → Social and relationship Capital → Social and relationship Capital
Moreover, we provided about €1 billion of European We believe that participants in the real economy UniCredit has a long tradition of helping people find MATERIAL TOPICS Investment Bank funding to Italian companies and we FOCUS need assistance in comprehending the composition solutions in the sectors that serve as the backbones launched the new Minibond10 product, attracting the Social Impact Banking and structure of their sectors, in gaining experience of the countries where we work. We are increasing the interest of Corporate Companies for total emissions In our commitment to a fairer and more inclusive society, abroad, and in expanding their ability to innovate. competitiveness of these sectors by providing advice of €15 million. we have launched Social Impact Banking, our project These abilities are vital to competing in increasingly and concrete products that improve productivity, that identifies, finances, and promotes individuals, competitive markets. efficiency and growth prospects. In Germany, a dedicated specialist unit supports micro-enterprises and initiatives that have a positive relationship managers so they can find the ideal social impact. Through Social Impact Banking, we provide credit, share our financial and business know-how with A 2017 snapshot of sector-specific support provided by our Group promotional lending program, grants and guarantees communities, and build partnerships with organizations for each customer’s financing need. In September, Sector (COUNTRY) Tailored solutions that share our values, such as social and trade associations, the specialist unit began a new initiative concerning > Italy > Germany foundations and public institutions. This also benefits our digitization/innovation loan programs, informing Startups • acceleration program running since 2009 • initiative in which experienced businesswomen Group: it will build on UniCredit’s experience in supporting relationship managers regarding possible solutions AT, IT, BS, HU, to identify, train and support Italy’s most on the Women’s Council and our bank’s startup social initiatives, sharpening their ability to measure for their customers and incentivizing them to apply. DE, HR innovative startups and SME’s experts work with female entrepreneurs for six their impact and enabling us to create stronger ties with Through the specialist unit, this year a stock of over • selected 41 companies from a pool of 797 months to help them navigate the process of communities. €8.7 billion of promotional loans has been applicants to receive support in four sectors: funding their own companies administered, while more than €2.7 billion in new Our approach clean tech, digital, innovative made in Italy, • for its fifth edition, over 140 applications We work hand-in-hand with our partners to build a solid credit lines has been generated. and life science were vetted to select the most innovative support network than can magnify the impact of their • more than €7 million (and €20 million since business ideas initiatives. Since our people play a key role in this process, In Austria, we have been working with a number 2015) contributed to promising companies • 6 winners were chosen by a jury to receive a the Group has supported the creation of UniGens, a volunteer of organizations to help customers gain access to by stakeholders (venture capital funds, six-month mentorship from members of the association of former UniCredit employees who will provide credit initiatives. In cooperation with the Austrian institutional investors, angel investors). Women’s Council. training, mentoring and expertise to worthy micro and Promotion Agency, we are providing grants from the social enterprises, students and individuals at risk of social > Italy European Regional Development Fund (ERDF) for exclusion. Social Impact Banking began in Italy at the end Travel and • supporting the economic development of Italian SMEs in the tourism sector with dedicated sustainable investments in innovative SMEs. From of 2017 and will be extended in the next future to the other tourism services and products 2014 to 2020, this fund has allocated an amount of IT, HR countries where our Group is present. It encompasses several • more than €627 million in credit has been extended to clients operating in this sector for a €165 million for Austrian SMEs. coordinated programs: total amount of over €1.7 billion from the beginning of the initiative, April 2015 • achievements: top quality network building for targeted entrepreneurs; increase in Our Central Eastern European (CEE) Division remains Impact financing competitiveness for SMEs; education in business for enterprises; reinforcement of particularly committed to advisory for EU Funds We provide subsidized loans and competitively priced communication/information sharing among economic stakeholders. opportunities. In Bulgaria, for example, through major products and services to both for-profit and not-for-profit financial instruments (JEREMIE, EMPF, RSI, InnovFin, entities that are meeting social needs, such as strengthening > Austria National Guarantee Fund), we supported more than and promoting inclusion. The program, which measures Real estate • subsidization from non-profit associations keeps housing costs relatively low, potential remedy DE, AT 2,500 companies in 2017, easing their access to the social impact achieved by these entities, is designed to for housing inequality financing. In Croatia, we have extended cooperation support social innovation as a driver of positive change. We • this initiative demands highly specialized knowledge to accelerate the development of social with a consultancy company for another 3 years will share success stories from this project and promote new housing partnerships and networks that broaden impact financing. (2017-2019) in order to help clients identify which • new loans for social housing totaled over €202 million. Moreover, the social impact of enterprises will be measured tenders they are eligible for. This service involves > Russia and possibly rewarded through a pay for success mechanism. offering free one-off consultation, providing financial Agriculture • state subsidizing of agriculture and agro-industrial sector via banking system support, and supplying a range of tailor-made products Microcredit IT, DE, HR, RU • received nomination to be one of the systemically important banks taking part in this program designed to comply with EU tendering requirements. We support the launch and growth of small businesses • subsidized lending for working capital finance and investment projects at rate beneficial that are often excluded from access to traditional banking • made approximately €30 million in loans to 20 borrowers. In Hungary, in cooperation with advisory partners, products and services. Through microcredit programs, we identify, select and finance projects that help foster inclusion we provide customers complex services that > Italy facilitate their access to public funds. These services and broaden employment. Thanks to a network of volunteers – former UniCredit employees – we offer advice to support Infrastructure • advisory (with long-term solutions via bank market and capital markets) and debt provider (as include external communication of tender calls DE, HR, RS, BG these companies as they grow and develop. the Italian leader in the project finance market) and related services via newsletters, pre-financing • transactions for large scale installations in various sectors such as oil and gas, transportation, Financial education and inclusion and co-financing of investment projects, as well and infrastructure We promote financial literacy as a way to support small as transactional banking connected to EU funds. • financing the construction of a new capital installation, or the refinancing of an existing scale businesses and social enterprises as they begin Moreover, through the European Investment Fund’s installation operating, focusing on sustaining the inclusion of young InnovFin SME Guarantee Facility, introduced in • financed 11 projects, for a total credit lines of €454 million. 2016, we are providing further working capital and people and vulnerable groups. As part of the Italian Ministry investment financing to eligible SME and mid-cap of Education, Universities and Research’s Alternanza Scuola > Italy Non-profit customers. In 2017 we provided new credit line for Lavoro initiative, we have launched in the schools a training • dedicated service model offers specialized financial products and services to non-profit IT around €29.6 million with a total stock of about €87 program to increase financial awareness and encourage organizations – including a special credit rating process – benefitting roughly 36,000 clients million.11 entrepreneurial spirit. (including about 3,200 new clients) • new loans of roughly €106 million were made.
10. Bonds issued by listed or unlisted companies. Issues are distinct from an ISIN code and allow companies to raise funds from investors in exchange for credit ratings. 11. The amounts of the new credit lines and the stock refer to the total portfolio managed with public funds.
54 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 55 Our Strategy Natural Capital → Natural Capital
Enhancing energy efficiency MATERIAL Execute an effective TOPICS environmental strategy At the forefront of our initiatives to reduce energy consumption, we are making UniCredit’s premises Earth’s natural resources and the countless services that are drawn from them make more energy-efficient. This begins with energy audits, human life possible. The bank’s activities have an impact on natural capital that must be UniCredit’s solid system of governance guides its which we are conducting above and beyond legal monitored and limited. behavior to conserve natural capital, coherently compliance requirements. So far, we have audited the with its commitment to prevent and mitigate any energy efficiency of 43 large UniCredit buildings and environmental impact of our operations and lending1 30 branches, by identifying and correcting several O S OC S O C activities, as set forth in our Environmental Policy.2 anomalies and devising energy-efficiency measures. The Group established the policy in 2000 and Among the various methods used to monitor updated it in 2012. Several UniCredit legal entities use UniCredit’s energy consumption, we have installed environmental management systems to provide an centralized, remote-controlled energy measurement operational framework for the implementation of the systems in more than 1,000 branches. These SO policy. As we implement this environmental strategy, controls, which we began installing in 2007, enable O N N our Group holds ISO 14001 certification through optimized timing and limits for branch temperature CONS ON CONS ON UniCredit Bank Austria AG, UniCredit Bank AG and control systems. UniCredit Bank Czech Republic and Slovakia, as. Furthermore, UniCredit SpA is registered under We continue to utilize new technologies to reduce the EMAS Regulation. environmental footprint of our operations. In 2017, we further reduced our office space in Western Europe by nearly 120,000 square meters and closed 409 retail branches in the same perimeter. This effort to reduce S S Reduce our our footprint, part of the UniCredit Transform 2019 illi e po re to t e rene a e energ e tor plan, will result in a total reduction of 332,000 square in ope 1 and 2 e i ion in e t e a e ear environmental impacts meters of office space and the closing of 944 retail • illi energy efficiency loans to individuals branches, by the end of 2019. The UniCredit climate strategy calls for a major reduction in our operational emissions of greenhouse We continue to invest in making our data centers more gases. Our medium-term target is to reduce our energy-efficient. Although they are subject to annual CO N C S carbon emissions by 60 percent by 2020, and our increases in use for IT-related activities, their cooling long-term target is a reduction of 80 percent by systems, new uninterruptible power supplies (UPSs) and 2030. In 2017, we achieved an overall reduction of 41 overall engineering are designed to avoid any increase in CONS ON percent versus our 2008 Scope 1 and 2 emissions. We energy consumption even as they meet heavier demand. accomplished this by enhancing energy efficiency, by In 2017, the recorded power consumption at our two finding smarter ways to use our workspaces, and by data centers in Verona was 24 million kWh and 15 increasing the digitization of our banking operations. million kWh, respectively, which puts the performance N N of our new UPSs at the top of the efficiency curve. In N N C NC O O ON e i i tre effect, we registered a flat rate of power consumption in 100 2017 versus 2016, while the projected increase, based solely on the higher IT load, would otherwise have been around 1.7 million kWh. The saving was due to our N S N SS 0 energy-efficiency measures, as the new UPSs reduce C O N energy leakage. This is reflected in the Italian data 0 centers’ power usage effectiveness (PUE) ratios,3 which were reduced further in 2017, as shown below. 0
rati 20 erona1 200 onte ian o O S 2012 erona2 a on • Contin ed red tion o e i ion 2017 ni • Promotion of green sensitive practices in the workplace 2020 er ar 201 201 2017 1. Refer to the Risk Management and Compliance Chapter and to the 2016 Integrated Report for more information. 2. Refer to https://www.unicreditgroup.eu/content/dam/unicreditgroup-eu/documents/en/sustainability/environment-suppliers/environmental-management- system/UniCredit-Environmental-Policy_last.pdf for more information. 3. The ratio of total power used by the data center to the power used for IT processing.
56 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 57 Our Strategy Our Strategy → Natural Capital → Natural Capital
By the end of 2019, we will complete the migration Cutting consumption environmentally certified products, we prefer to use Promoting green bonds MATERIAL of our data from less efficient small data centers to TOPICS providers with an Environmental Magement System our most efficient facilities. This consolidation will By reducing our consumption of materials, we can (EMS) certified under EMAS and ISO 14001 standards. UniCredit, the first-ever lead manager of a green bring an estimated saving of 23 percent in energy increase the sustainability of our Group. The use of paper bond issuance, continues to invest in these consumption as of 2019. can be limited by means of greater use of technology. UniCredit Bank Austria’s Procurement Policy, which instruments. We joined the European Investment makes it mandatory to purchase electricity from Bank in the 10 year celebration of its Climate UniCredit believes the use of renewable energy is In this context, we are working to further position our renewable sources, is a prime example of how Awareness Bond, hosting the event in Italy. In 2017, vital to tackling global climate change. We do our Group as a data-driven bank. In 2017, we implemented UniCredit’s commitment to responsible action and we served as joint bookrunner or joint arranger of part by procuring the vast majority of our electricity more new technologies, including Omnichannel Cockpit, sustainable practices includes its suppliers. Another 11 issues for a total placement of over €7 billion. from renewable sources for our networks. In 2017, a tool that uses big data to improve the efficiency of example of this commitment can be seen in Italy, Over the year, we also saw growing demand nearly all of the electricity that we used in Italy, business analysis related to customer clusters and our where we have completed audits of 19 external service for green loans, and UniCredit served as lead Germany and Austria came from renewable energy network’s footprint. The launch of Omnichannel Cockpit providers since 2015 to ensure they comply with arranger for 2 deals totaling an issued amount sources: 96 percent in Italy, 100 percent in Germany is enabling us to decommission obsolete internal applicable laws, understand the environmental impacts of €104 million. and 94 percent in Austria. At the Group level, this databases and create a common working platform to of their activities, and take all necessary steps to satisfy accounted for 78 percent of the total electricity record branch transactions and digital products. It will UniCredit’s approach to environmental management. consumption. further increase energy efficiency by reducing mobility, Financing energy efficiency reporting needs and paper consumption. We also continue to partner with multilateral Our Centralized Document Dematerialization (CDD) development banks and government-subsidized FOCUS Promote business that Mobility management project in Italy aims to make the handling of branch lenders such as KfW, a German development bank, documents more efficient and secure by developing supports natural capital to promote energy efficiency. In 2017, our loans Groupwide, we continue to promote smart a management process based on a new IT platform. to SMEs through these institutions’ programs solutions that enable remote meetings. Desktop The project is based on scanning and digitally storing At UniCredit, we are always open to business amounted to over €1.3 billion. Additionally, we video communication tools are available for all contract documents and transaction confirmations to opportunities that arise from the need to address provided over €270 million in energy-efficiency branch managers and, in some countries, such as create a highly automated data system. This process environmental challenges. loans to individuals in 2017. Austria and Russia, for all staff. Every employee began with a pilot phase in January 2017. It is now in UniCredit’s commitment to EU energy-efficiency at UniCredit headquarters has access to video place for all branch finance documents (e.g., deposit targets is also demonstrated by its engagement conference facilities, and state-of-the-art video forms and government bonds purchases). In 2017, the with industry initiatives like the green tagging technology has been widely adopted for online Supporting renewable energy sources CDD securely stored nearly 4 million documents. It is working group promoted by UNEP Inquiry and by meetings. Our Group travel policy encourages the forecast to extend to a number of other documents by We continue to invest in renewable energy sources. Climate Strategy & Partners, and the EeMap project use of public transport and, since 2016, the Group the end of 2018, including those related to current As of December 2017, our portfolio of renewable promoted by the European Covered Bond Council. has prohibited non-customer-related travel for one accounts. The CDD is further supported by FirmaMia5, energy projects was valued at €8.2 billion.6 Overall, Both initiatives promote solutions that enhance week each month. In Germany, this measure has which our customers can now use to digitally sign their the largest portion of our financing for renewable green mortgages and other ad hoc instruments that been taken one step further, with the prohibition routine in-branch transactions and contracts. projects goes to photovoltaic plants, with a share channel funding toward greater energy efficiency of all non-customer-related travel. of 47 percent. Wind energy comprises 32 percent of in residential buildings. This is a key means to FirmaMia 2017 the portfolio, with other renewable energy sources successfully achieving Europe’s targets. According to our data, the widespread adoption making up the remaining 21 percent. of flexible working solutions in Italy has saved In 2017, UniCredit traded over 730 million tons in excess of 350,000 km in employee commuter 7.4 million contracts digitally signed of CO2e valued almost €4.5 billion in the EU 4 e e a le e ergy p rt li travel over the first three quarters of 2017. 445 tons of paper saved ETS market. In 2017, employees in Austria collectively bicycled over 100,000 km to and from work under 12.3 million in-branch digital transactions a bank initiative promoting commuting by bicycle or public transport rather than car FOCUS or motorcycle. Working with WWF Sourcing responsibly t ltai We continued to support WWF initiatives by donating nearly €520,000 to the WWF Italy UniCredit’s procurement model adheres to the Oasis System in 2017. These donations were part precepts of sustainability. Suppliers must meet certain of a sponsorship that, since its inception, has minimum sustainability requirements and are selected raised more than €2.3 million for WWF. UniCredit according to the standards of the International Labour provided further support to WWF in 2017 for the Organization relating to fundamental human rights, launch of their Campagna #GenerAzioneMare.7 child labor, freedom of association, working conditions, equal pay, health, safety and business ethics. Suppliers must also comply with the standards set forth in Ot er re e a le our Environmental Policy. In addition to sourcing ur e i
4. Refer to the Human Capital chapter of the 2016 Integrated Report for more information on flexible working. 6. Expressed in terms of Exposure at Default (EAD); the perimeter includes roughly €1 billion attributable to Yapi Kredi. 5. Refer to the 2015 Integrated Report for more information. 7. Refer to http://www.wwf.it/mediterraneonew.cfm for more information.
58 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 59 Our Strategy Intellectual Capital → Intellectual Capital
Ensure secure and assessment results and regulatory requirements MATERIAL - in order to continuously assess our ICT security TOPICS effective ICT systems status. Based on these factors, we have developed a multi-year plan for ICT security that helps review our We are investing in our information and communications technology (ICT) systems, our We remain focused on strengthening UniCredit’s framework of related policies across the Group.1 internal processes and our ability to innovate in order to transform UniCredit’s operating information and communications technology (ICT) to model and provide a better customer experience. enable the digital transformation of the Group. In 2017, our ICT security initiatives were focused on protecting UniCredit’s assets from any vulnerabilities. Despite a security breach at UniCredit in Italy, no O S OC S O C I Simplifying and upgrading our ICT data that could be used to gain access to customer accounts or make unauthorized transactions was In 2017, we invested in a wide range of initiatives affected.2 We took immediate action to close the to support the evolution of our business and the breach and put in place a crash program to address modernization of our systems – from redesigning our identified vulnerabilities. S C ICI C CI ICT factory to updating our technology. C I C I O I O At the same time, we continued to invest in ICT IC S S S OC SS S The extensive reorganization of our ICT global factory security awareness-raising among our employees. has improved its agility and enabled it to better Videos were regularly posted on the Group intranet meet the needs of our business. Over the year, we to promote compliant and safe behaviors, reaching replaced the majority of the ICT factory’s leadership roughly 48,000 page views. To make this awareness team and these appointments have increased the campaign more effective, in 2017 we also invested in diversity of its leadership in terms of gender (5 out of two phishing attack simulations that involved roughly 17 positions are now held by females) and national 13,000 Group colleagues each. S S origin (5 nationalities). In addition, we reduced layers of • o 201 target or de o i ioning o IC te a ie ed management and simplified the organization to make it • ro p ide Best Practice Sharing progra in p a e more responsive. Optimize processes The ICT factory’s redesign also involved technological updates, which achieved cost efficiencies and Thanks to increasing automation and digitization, increased its readiness to meet the challenges we continue to streamline processes and improve CO I I C S of the digital era. efficiency for the benefit of our customers. The decommissioning of systems progressed well, In 2017, we kicked off our first robotic process SI SS CO I I with more than 920 applications eliminated as of automation pilot projects in Italy and Germany. S C I 2017, or about 84 percent of the 2019 target, with With these projects, we are beginning to automate some global applications replacing previous local our current account, credit and data management applications. processes.3 So far three pilot projects have been SI I I C S O Moreover, we made progress in our efforts to successfully completed; we intend to leverage I C rationalize and simplify ICT infrastructure, reducing the results to enable greater efficiency in our roughly 10 percent of our mainframe technology and non-automated tasks. roughly 5 percent of our open systems technology. C S O I O C S We also continued to deploy tech solutions such as S IC S optical character recognition, smart workflows and Enhancing ICT security digital signature to make our work more efficient Groupwide. These enabled further simplification and A substantial proportion of UniCredit’s ICT digitization of our commercial banking processes, investments are made to strengthen our ICT security delivering significant benefits in 2017. Process management so that we can better protect the improvements include: Group’s customers and business. To that end, roughly • the recognition rate in legitimation reached 94 300 of our full-time employees are allocated to ICT percent (vs initial target of 80 percent) in Germany security activities and operations. • legal and fiscal investigation times were reduced IO I I S by roughly 50 percent in Italy Our ICT security strategy takes into account several • payment investigation times were reduced • rt er IC opti i ation to pport o r tran or ation factors - including external threat trends, internal by 43 percent in Italy. • Increased process automation and digitization for the benefit of our customers
1. Refer to the 2016 Integrated Report for more information on our ICT security governance and framework of policies. 2. Refer to UniCredit press release from July 26, 2017 for more information. 3. Refer to the Strategic Plan section for more information on current account processes.
60 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 61 Our Strategy → Intellectual Capital UniCredit Contribution to the Foster our ability FOCUS Sustainable Development Goals to innovate Best Practice Sharing program Our Best Practice Sharing program facilitates the We continue to seek innovative solutions that make spread of successful innovative solutions for products Our most significant initiatives contribute to development, promote well-being, help our products and services work better for our clients. and processes across our Group’s different markets. conserve the environment, and are in line with the United Nations Global Goals for This program is enabling us to maximize synergies Sustainable Development.1 Our research and development efforts focus on across the Group and better serve customers. creating cutting-edge solutions for our business, in CU SUS B collaboration with academic and industrial partners. Based on positive results from the launch of the Best S OP O S e erences an pages In 2017, these efforts resulted in the creation of a Practice Sharing program in CEE countries in 2016, single borderless liquidity pool which our clients will its was subsequently extended to Italy, Germany FO C OU n iron enta and o ia ri be able to access through a novel internal currency and Austria. In 2017, we also established a Group OF at ra Capita trading platform. This service will be progressively best practice forum, where representatives of every O pp e ent ator prin ip e S available across a number of Central and Eastern division and country present their best solutions to SOC S European (CEE) countries where we operate, starting roll out across UniCredit. from Russia. BEST (Boost Every Single Talent) is an example of SUPPO ran or operating ode and Our Group also continues to scout and invest in fintech the best practices that are being shared across O OU a i i e a e o t e o er ia companies to obtain more innovative solutions. Since the Group. This new program, which aims to drive O O an its inception, UniCredit EVO4 has thoroughly reviewed sustainable business performance in commercial O o ia and re ation ip Capita roughly 300 fintech startups, identifying roughly 40 banking, provides incentives and training to improve promising companies, and investing in two of them in knowledge and technical and managerial skills 2017. These two companies offer solutions that will among network colleagues. After it achieved positive improve cash flow management for our SME clients and results in Bulgaria, BEST was successfully rolled out in U S an Capita use artificial intelligence and data analysis to reduce Italy in 2017. C US O cyber risk in various areas.
igital initiatives supporting our trans ormation
reas o igital evelopment Ongoing initiatives S SOC CO O C o ia and re ation ip Capita igital an multichannel e perience • e g o a on ine and o i e an ing p at or OP • Inno ati e retai pa ent o tion
visory services • e ad an ed digita and ana ti a too in pport o ad i or UC OU at ra Capita O pp e ent ator prin ip e S P C S Process optimi ation • nd to end pro e rede ign and digiti ation
P O O BUS SS SUPPO S at ra Capita is management • re ored redit ine U C P • o on er e rit
A. Refer to the Strategic Plan section for more information. pp e ent taina i it go ernan e S O C Main Partnership and affiliations: S
4. Refer to the 2016 Integrated Report for more information.
1. The selection of initiatives and Sustainable Development Goals are non-exhaustive.
62 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 63 GRI Content Index and UN Global Compact GRI Content Index → General standard disclosures
Indicators References Notes and pages and UN Global Compact G4-21 Material aspects outside the 2017 Integrated Report 24-25; S.32-S.35 Organization G4-22 Restatements of information provided in 2017 Integrated Report 2; S.36, S.49, S.54 earlier Reports The following table presents the GRI Content Index with reference to the “In Accordance-core” option, as foreseen G4-23 Significant changes from previous 2017 Integrated Report 2; S.36, S.54 by the GRI-G4 Guidelines. Any omissions are reported as notes to the individual indicators, if required. reporting periods in scope and aspect boundaries Stakeholder engagement General standard disclosures G4-24 Stakeholder groups engaged by the 2017 Integrated Report 24-25; S.32-S.35 Organization Indicators References Notes and pages G4-25 Identification and selection of 2017 Integrated Report 24-25; S.32-S.35 Strategy and analysis stakeholders to engage G4-1 Statement from the CEO 2017 Integrated Report 4-5 G4-26 Organization’s approach to stakeholder 2017 Integrated Report 24-25, 48-50; S.32-S.35, engagement S.51-S.52 G4-2 Key impacts, risks, and opportunities 2017 Integrated Report 4-5, 11, 14-17, 22, 24, 54, 62; S.16-S.20 G4-27 Key topics collected through stakeholder 2017 Integrated Report 24-25; S.32-S.35, S.51-S.52 engagement Organizational profile Report profile G4-3 Name of the Organization UniCredit SpA G4-28 Reporting period 2017 Integrated Report 2 G4-4 Primary brands, products, and/or 2017 Integrated Report 22-23 G4-29 Date of the last Report 2017 Integrated Report 2 services 2017 Consolidated Reports and Accounts G4-30 Reporting cycle 2017 Integrated Report 2 G4-5 Location of the Organization’s Piazza Gae Aulenti 3 - Tower headquarters A - 20154 Milano G4-31 Contact point for questions regarding 2017 Integrated Report Inside back cover the Report G4-6 Countries where the Organization 2017 Integrated Report 6-7 operates G4-32 GRI Content Index 2017 Integrated Report 64-71, 73-75 G4-7 Nature of ownership and legal form 2017 Integrated Report 12-13 G4-33 External assurance 2017 Integrated Report 2, 73-75 2017 Consolidated Reports and Accounts Governance 2017 Report on Corporate Governance and G4-34 Governance structure 2017 Integrated Report 12-13; S.10-S.15 Ownership Structure 2017 Report on Corporate Governance and G4-8 Markets served 2017 Integrated Report 6-7, 28-39 Ownership Structure G4-9 Scale of the Organization 2017 Integrated Report 6-7, 22-23, 41; S.36 G4-35 Delegating authority for economic, 2017 Integrated Report 12, 16; S.14 environmental and social topics G4-10 Workforce characteristics 2017 Integrated Report S.36-S.37, S.40; Data referring to external workers are G4-36 Positions with responsibility for 2017 Integrated Report 12, 16; S.14 currently unavailable. economic, environmental and social topics G4-11 Employees covered by collective 2017 Integrated Report S.42 bargaining agreements G4-37 Consultation between stakeholders 2017 Integrated Report 24-25, 47-49; S.14 and the highest governance body on G4-12 Organization’s supply chain 2017 Integrated Report 22-23, 58-59 economic, environmental and social G4-13 Changes in Organization’s size, structure, 2017 Integrated Report 2 topics ownership or its supply chain 2017 Consolidated Reports and Accounts G4-38 Composition of highest governance body 2017 Integrated Report 13 G4-14 Precautionary principle 2017 Integrated Report 16; S.16-S.20 and its committees 2017 Report on Corporate Governance and G4-15 Externally developed charters, principles 2017 Integrated Report 17, 47, 57-59, 63; S.10, Ownership Structure or initiatives to which the Organization S.16-S.20, S.26; G4-39 Executive powers of the Chairman 2017 Integrated Report 13 subscribes/endorses Evolution Economy: https:// 2017 Report on Corporate Governance and www.unicreditgroup.eu/en/a- Ownership Structure sustainable-bank/evolution- economy.html G4-40 Qualification and expertise of highest 2017 Integrated Report 13 governance bodies G4-16 Membership in associations or 2017 Integrated Report S.4-S.7 2017 Report on Corporate Governance and organizations Ownership Structure Identified material aspects and boundaries G4-41 Processes to avoid conflicts of interest 2017 Integrated Report S.29 G4-17 Entities included in the Integrated 2017 Integrated Report 2A 2017 Report on Corporate Governance and Ownership Structure Report 2017 Consolidated Reports and Accounts G4-42 Highest governance bodies and 2017 Integrated Report 12, 16; S.14 G4-18 Reporting principles for defining 2017 Integrated Report 2, 24-25; S.32-S.35 senior executives’ roles in the Integrated Report content development, approval, and updating G4-19 Material aspects identified in defining 2017 Integrated Report 24-25; S.32-S.35 of the organization’s purpose, value Integrated Report content or mission statements, strategies, G4-20 Material aspects within the Organization 2017 Integrated Report 24-25; S.32-S.35 policies, and goals related to economic, environmental and social impacts G4-43 Measures taken to develop and 2017 Integrated Report S.13 enhance the highest governance bodies’ collective knowledge of economic, A. The following legal entities have been included in the reporting perimeter: UniCredit SpA, AO UniCredit Bank, Card Complete Service Bank AG, FinecoBank SpA, environmental and social topics Food & More GmbH, Ooo Unicredit Leasing, Schoellerbank Aktiengesellschaft, UniCredit Bank ad Banja Luka, UniCredit Bank AG, UniCredit Bank Austria AG, UniCredit Bank Czech Republic and Slovakia, as, UniCredit Bank Czech Republic and Slovakia, as, UniCredit Bank dd,UniCredit Bank Hungary Zrt, UniCredit Bank SA, UniCredit Bank Serbia Jsc, UniCredit Banka Slovenija dd, UniCredit Bulbank AD, UniCredit Business Integrated Solutions Austria GmbH (with its activities in Austria, Poland, and Romania), UniCredit Business Integrated Solutions SCpA (with its activities in Italy, Germany, Czech Republic, Hungary, Poland, Romania, and Slovakia), UniCredit Consumer Financing EAD, UniCredit Consumer Financing IFN SA, UniCredit Direct Services GmbH, UniCredit Leasing (Austria) GmbH, UniCredit Leasing Corporation IFN SA, UniCredit Leasing Croatia doo za Leasing, UniCredit Leasing CZ as, UniCredit Leasing doo, UniCredit Leasing EAD, UniCredit Leasing Fleet Management Srl, UniCredit Leasing GmbH, UniCredit Leasing Hungary Zrt, UniCredit Leasing Slovakia as, UniCredit Leasing SpA, UniCredit Leasing, leasing, doo, Zagrebačka Banka DD.
64 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 65 GRI Content Index and UN Global Compact GRI Content Index and UN Global Compact → Specific standard disclosures → Specific standard disclosures
Indicators References Notes and pages DMA and indicators References Notes and pages G4-44 Evaluation of the Board of Directors’ 2017 Integrated Report S.13 G4-EC2 Financial implications, risks and 2017 Integrated Report 10, 16, 56, 59; S.16-S.20 performance 2017 Report on Corporate Governance and opportunities for the organization’s Ownership Structure activities due to climate change G4-45 Highest governance bodies’ role in 2017 Integrated Report 12, 16; S.14, S.17-S.18 G4-EC3 Coverage of the Organization’s 2017 Integrated Report S.44 the identification and management of defined benefit plan obligations economic, environmental and social 2017 Consolidated Reports and Accounts impacts, risks, and opportunities G4-EC4 Financial assistance received from 2017 Integrated Report S.41 2017 Report on Corporate Governance and Government Ownership Structure Material aspect: indirect economic impacts G4-46 Highest governance bodies’ role in 2017 Integrated Report 12, 14-16; S.14, S.16-S.17 G4-DMA Disclosures on Management Approach 2017 Integrated Report 47, 50-55; S.18-S.20 reviewing the effectiveness of the organization’s risk management G4-EC7 Development and impact of 2017 Integrated Report 47, 50-55; S.18-S.20 processes for economic, environmental infrastructure investments and and social topics. services supported 2017 Report on Corporate Governance and G4-EC8 Significant indirect economic 2017 Integrated Report 47, 50-55 Ownership Structure impacts G4-47 Frequency of the highest governance 2017 Integrated Report 12, 14-16; S.14, S.16-S.17 Category: Environmental bodies’ review of economic, Material aspect: materials environmental and social impacts, risks, G4-DMA Disclosures on Management Approach 2017 Integrated Report 58-59 and opportunities G4-EN1 Materials used by weight or volume 2017 Integrated Report S.55; In 2017, the total copy 2017 Report on Corporate Governance and paper consumption amounted Ownership Structure to roughly 4,405,000 kg. G4-48 Highest committee or position that 2017 Integrated Report 2 Material aspect: energy formally reviews and approves the Organization’s Integrated Report G4-DMA Disclosures on Management Approach 2017 Integrated Report 57-58 G4-49 Communicating critical concerns to the 2017 Integrated Report 12, 47; S.30-S.31, S.41 G4-EN3 Energy consumption within the 2017 Integrated Report S.55; In 2017, direct energy highest governance bodies Organization consumption amounted to roughly 571,000 GJ. The main 2017 Report on Corporate Governance and fuels used were natural gas Ownership Structure (about 95 percent), followed G4-51 Remuneration policies for highest 2017 Integrated Report S.15; Group Compensation by crude oil and petroleum governance bodies and senior executives Policy products (about 5 percent). 2017 Report on Corporate Governance and Indirect energy consumption Ownership Structure amounted to roughly 2,433,000 GJ of which district heating G4-52 Principles for determining remuneration 2017 Integrated Report S.15; Group Compensation accounted for about 18 percent Policy and electricity for about 82 2017 Report on Corporate Governance and percent. Electricity consumption Ownership Structure included self-produced energy G4-53 How stakeholders’ views are sought 2017 Integrated Report S.15; Group Compensation from photovoltaic plants in and taken into account regarding Policy Italy and Austria, whereas in remuneration Germany approximately 24,000 GJ of self-produced energy form 2017 Report on Corporate Governance and renewable sources was sold. Ownership Structure G4-EN5 Energy intensity 2017 Integrated Report 57; S.55; Pro-capita data is Ethics and integrity calculated using the energy G4-56 Organization’s values, principles, 2017 Integrated Report 10-11, 18-19; S.10 sources reported in the G4- standards and norms of behavior EN3 indicator. G4-57 Internal and external mechanisms for 2017 Integrated Report S.30-S.31 G4-EN6 Reduction of energy consumption 2017 Integrated Report 57-58; S.55 seeking advice on ethical and lawful G4-EN7 Reductions in energy requirements 2017 Integrated Report 57-58 behavior, and matters related to of products and services organizational integrity Aspect: water G4-58 Internal and external mechanisms for 2017 Integrated Report S.25, S.30-S.31 reporting concerns about unethical or G4-EN8 Water withdrawal 2017 Integrated Report S.55; In 2017, the total water unlawful behavior, and matters related withdrawal from public water to organizational integrity mains or other water services providers amounted to roughly 2,315,000 m3. Specific standard disclosures Material aspect: emissions G4-DMA Disclosures on Management Approach 2017 Integrated Report 57-58 DMA and indicators References Notes and pages Category: Economic Material aspect: economic performance G4-DMA Disclosures on Management Approach 2017 Integrated Report 6-7, 10, 56, 59; S.2-S.3, S.16-S.18 G4-EC1 Direct economic value generated and 2017 Integrated Report S.2-S.3 distributed
66 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 67 GRI Content Index and UN Global Compact GRI Content Index and UN Global Compact → Specific standard disclosures → Specific standard disclosures
DMA and indicators References Notes and pages DMA and indicators References Notes and pages G4-EN15 Direct greenhouse gas (GHG) 2017 Integrated Report S.54; Gases included in the Material aspect: compliance emissions (Scope 1) calculation: CO , CH , N O, HFCs; 2 4 2 G4-DMA Disclosures on Management Approach 2017 Integrated Report 57-59 Sources for emission factors: - DEFRA, UK Government G4-EN29 Monetary value of significant fines No relevant fines were imposed GHG Conversion Factors and total number of non-monetary in 2017 for non-compliance for Company Reporting sanctions for non-compliance with with environmental laws or (2017)B, for direct energy environmental laws and regulations regulations. consumption, business travel Material aspect: transport and refrigerant gas leakages. G4-DMA Disclosures on Management Approach 2017 Integrated Report 58 G4-EN16 Energy indirect greenhouse gas 2017 Integrated Report S.54; Gases included in the G4-EN30 Environmental impacts of transport 2017 Integrated Report 58; S.54 (GHG) emissions (Scope 2) calculation: CO2, CH4, N2O; Sources for emission factors: Aspect: supplier environmental assessment - DEFRA, UK Government G4-EN32 Suppliers screened using 2017 Integrated Report 58-59; In UniCredit 100 GHG Conversion Factors for environmental criteria percent of new suppliers Company Reporting (2017)B, are screened using socio- for district heating; environmental criteria. - IEA, CO Emissions from Fuel 2 Category: Social Combustion (2015 edition)C, for electricity consumption - Labor practices and decent work Location Based method; Material aspect: employment - Association of Issuing G4-DMA Disclosures on Management Approach 2017 Integrated Report 43-45 Bodies (AIB), 2016 European Residual Mixes, V.1.2 (2017), G4-LA1 Number and rates of new employee 2017 Integrated Report S.38-S.39 for electricity consumption - hires and employee turnover Market Based method. G4-LA2 Benefits provided to full-time In nearly all countries, part- G4-EN17 Other indirect greenhouse gas (GHG) 2017 Integrated Report S.54; Gases included in the employees that are not provided to time and fixed-term employees temporary or part-time employees are offered the same benefits emissions (Scope 3) calculation: CO2, CH4, N2O; Sources for emission factors: that are offered to full-time and - DEFRA, UK Government permanent employees. GHG Conversion Factors for Aspect: labor/management relations B Company Reporting (2017) , G4-LA4 Minimum notice periods regarding 2017 Integrated Report S.43 for business travel and waste operational changes, including disposal; whether these are specified in - CEPI, CEPI statistics (2016), for collective agreements copy paper use. Aspect: occupational health and safety G4-EN19 Reduction of greenhouse gas (GHG) 2017 Integrated Report 56-57; S.54 emissions G4-LA5 Workforce represented in health and 2017 Integrated Report S.46 safety committees G4-EN20 Emissions of ozone-depleting In line with applicable D substances (ODS) regulations, where necessary G4-LA6 Injuries, occupational diseases, lost 2017 Integrated Report S.47-S.48; In 2017, no fatal UniCredit continues to replace days, absenteeism and total number injuries have been reported. refrigeration and cooling of work-related fatalities systems that contain ozone- G4-LA8 Health and safety topics covered in 2017 Integrated Report S.47 depleting substances. In formal agreements with trade unions recent years some episodes of Material aspect: training and education refrigerant gas leakages have occurred in Germany and the G4-DMA Disclosures on Management Approach 2017 Integrated Report 16-19, 43-44; S.16 relevant GHG emissions have G4-LA9 Training per employee 2017 Integrated Report S.41 been calculated and included in G4-LA10 Programs for skills management and 2017 Integrated Report S.45 Scope 1 figures. In 2017, 78.2 kg lifelong learning of employees of refrigerant gas leakages were recorded (407F, R134a, R404A, G4-LA11 Employees receiving regular 2017 Integrated Report 44 R407C, R410A), amounting to 0 performance and career tons of CFC-11 equivalent. development reviews Sources for emission factors: Material aspect: diversity and equal opportunity - Ozone Secretariat UNEP, G4-DMA Disclosures on Management Approach 2017 Integrated Report 44-45 Handbook for the Montreal Protocol on Substances that G4-LA12 Composition of governance bodies 2017 Integrated Report 13, 44; S.36-S.37, S.40 Deplete the Ozone Layer (10th and breakdown of employees per 2017 Report on Corporate Governance and edition, 2016), for refrigerant indicators of diversity Ownership Structure gas leakages [CFC-11e]. Material aspect: equal remuneration for women and men G4-EN21 NOx, SOx, and other significant air No other significant air G4-DMA Disclosures on Management Approach 2017 Integrated Report 45 emissions emissions have been identified. G4-LA13 Ratio of basic salary and 2017 Integrated Report S.39 Aspect: effluents and waste remuneration of women to men G4-EN23 Total weight of waste by type and 2017 Integrated Report S.55 disposal method Material aspect: products and services G4-DMA Disclosures on Management Approach 2017 Integrated Report 57-59 G4-EN27 Mitigation of environmental impacts 2017 Integrated Report 57-59 of products and services D. Data referring to external workers and occupational diseases are currently unavailable.
B. The document contains public sector information licensed under the Open Government Licence v3.0 http://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/ C. Terms & conditions: https://www.iea.org/t&c/termsandconditions/
68 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 69 GRI Content Index and UN Global Compact GRI Content Index and UN Global Compact → Specific standard disclosures → Specific standard disclosures
DMA and indicators References Notes and pages DMA and indicators References Notes and pages Aspect: labor practices grievance mechanisms G4-SO4 Communication and training on anti- 2017 Integrated Report 19; S.26 G4-LA16 Grievances about labor practices 2017 Integrated Report S.49 corruption policies and procedures filed, addressed, and resolved Material aspect: anti-competitive behavior Human rights G4-DMA Disclosures on Management Approach 2017 Integrated Report 18-19; S.21-S.23, S.27 Material aspect: investments G4-SO7 Legal actions for anti-competitive 2017 Integrated Report S.28 G4-DMA Disclosures on Management Approach 2017 Integrated Report 16-17, 58-59; S.16, S.18; behavior, anti-trust, and monopoly 2017 Consolidated Reports and Accounts Human Rights Committment practices and their outcomes G4-HR1 Investment agreements and 2017 Integrated Report 16, 58-59; S.16, S.18; Human Material aspect: compliance contracts that include human rights Rights Committment G4-DMA Disclosures on Management Approach 2017 Integrated Report 18-19; S.21-S.23 clauses or that underwent human G4-SO8 Fines and sanctions for non- 2017 Integrated Report S.28 rights screening compliance with laws and 2017 Consolidated Reports and Accounts G4-HR2 Employee training on human rights 2017 Integrated Report 16-17; S.16; Human Rights regulations policies or procedures concerning Committment Product responsibility aspects of human rights that are relevant to operations Material aspect: product and service labeling Material aspect: non-discrimination G4-DMA Disclosures on Management Approach 2017 Integrated Report 48-49; S.51-S.52 G4-DMA Disclosures on Management Approach 2017 Integrated Report 45; S.41-S.42; Human Rights G4-PR5 Results of surveys measuring 2017 Integrated Report 48-49; S.51 Committment customer satisfaction G4-HR3 Incidents of discrimination and 2017 Integrated Report S.49 Aspect: marketing communications corrective actions taken G4-PR6 Sale of banned or disputed products Compliance attends to the Aspect: supplier human rights assessment Product Committees where it is required to express an G4-HR10 Suppliers screened using human 2017 Integrated Report 58-59; In UniCredit 100 opinion about compliance rights criteria percent of the new suppliers of products that are to be are screened using socio- commercialized. Compliance environmental criteria, also verifies whether the including compliance business to be performed is with International Labor a cross-border business and, Organization (ILO) conventions. in the case, it verifies the Material aspect: human rights grievance mechanisms preemptive licenses/passports G4-DMA Disclosures on Management Approach 2017 Integrated Report 45; Human Rights needed to perform the Committment business in the host country and whether the Group already G4-HR12 Grievances about human rights 2017 Integrated Report S.48-S.49; Human Rights owns them. impacts filed, addressed, and Committment; The monitored resolved incidents related to human Material aspect: product portfolio rights are: Discrimination G4-DMA Disclosures on Management Approach 2017 Integrated Report 46-55 (see Disputes concerning FS6 Portfolio for business lines 2017 Integrated Report S.50 discrimination); Labor (see Disputes concerning FS7 Monetary value of products and/ 2017 Integrated Report 46-55 labor, welfare issues and or services designed to deliver a administrative bodies); Child/ specific social benefit Forced (not applicable to the FS8 Monetary value of products and/ 2017 Integrated Report 59 sector). or services designed to deliver a Society specific environmental benefit Material aspect: local communities Material aspect: customer privacy G4-DMA Disclosures on Management Approach 2017 Integrated Report 47, 50-55; S.16-S.20 G4-DMA Disclosures on Management Approach 2017 Integrated Report 18-19, 61; S.29 G4-SO1 Operations with implemented local 2017 Integrated Report 47, 50-55; S.16-S.20 G4-PR8 Substantiated complaints regarding 61 community engagement, impact breaches of customer privacy and assessments, and development losses of customer data programs Material aspect: compliance FS13 Access points in low-populated or 2017 Integrated Report S.53 G4-DMA Disclosures on Management Approach 2017 Integrated Report 18-19; S.21-S.23 economically disadvantaged areas G4-PR9 Fines for non-compliance with laws 2017 Integrated Report S.28 by type and regulations concerning the 2017 Consolidated Reports and Accounts FS14 Initiatives to improve access to 2017 Integrated Report 51-52 provision and use of products and financial services for disadvantaged services people Material aspect: anti-corruption G4-DMA Disclosures on Management Approach 2017 Integrated Report 18-19; S.21-S.26 G4-SO3 Operations assessed for risks related 2017 Integrated Report S.25-S.26 to corruption
70 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report 71 GRI Content Index and UN Global Compact → Making the connection by GRI Indicators and UN Global Compact Principles
Making the connection by GRI Indicators and UN Global Compact Principles
UniCredit submits the Integrated Report as its annual Communication on Progress (COP), publicly disclosing to stakeholders also on progress made in implementing the Ten Principles promoted by the UN Global Compact and in supporting broader UN development goals, in its core business. The table included in this Report provides connections among GRI-G4 indicators and UN Global Compact Principles.
Categories Principles GRI-G4 Indicators Human Rights Principle 1 - Businesses should G4-HR2, G4-HR7, G4-HR8, G4-HR9, G4- support and respect the protection of HR12, G4-SO1, G4-SO2 internationally proclaimed human rights Principle 2 - Business should make sure they G4-HR1, G4-HR10, G4HR-11 are not complicit in human rights abuses Labour Principle 3 - Businesses should uphold G4-11, G4-HR4, G4-LA4 the freedom of association and the effective recognition of the right to collective bargaining Principle 4 - Businesses should uphold G4-HR6 the elimination of all forms of forced and compulsory labour Principle 5 - Businesses should uphold G4-HR5 the effective abolition of child labour Principle 6 - Businesses should uphold G4-10, G4-EC5, G4-EC6, G4-LA1, G4-LA3, the elimination of discrimination in G4-LA9, G4-LA11, G4-LA12, G4-LA13, respect of employment and occupation G4-HR3 Environment Principle 7 - Businesses should G4-EC2, G4-EN1, G4-EN3, G4-EN8, support a precautionary approach to G4-EN15, G4-EN16, G4-EN17, G4-EN20, environmental challenges G4-EN21, G4-EN27, G4-EN31 Principle 8 - Businesses should G4-EN1, G4-EN2, G4-EN3, G4-EN4, G4- undertake initiatives to promote greater EN5, G4-EN6, G4-EN7, G4-EN8, G4-EN9, environmental responsibility G4-EN10, G4-EN11, G4-EN12, G4-EN13, G4-EN14, G4-EN15, G4-EN16, G4-EN17, G4-EN18, G4-EN19, G4-EN20, G4-EN21, G4-EN22, G4-EN23, G4-EN24, G4-EN25, G4-EN26, G4-EN27, G4-EN28, G4-EN29, G4-EN30, G4-EN31, G4-EN32, G4-EN33, G4-EN34 Principle 9 - Businesses should encourage G4-EN6, G4-EN7, G4-EN19, G4-EN27, the development and diffusion of G4-EN31 environmentally friendly technologies Anti-corruption Principle 10 - Businesses should work G4-56, G4-57, G4-58, G4-SO3, G4-SO4, against corruption in all its forms, G4-SO5, G4-SO6 including extortion and bribery
An online tool that cross-references the GRI-G4 indicators to the Global Compact principles is available on the GRI website: https://www.globalreporting.org/resourcelibrary/UNGC-G4-linkage-publication.pdf
72 UniCredit • 2017 Integrated Report
Determination and distribution of Value Added Main partnerships Supplement and affiliations Selection of 2017 awards Governance Risk Management and Compliance Stakeholder Engagement Human Capital Social and relationship Capital Natural Capital Supplement Determination and → Determination and distribution of Value Added distribution of Value Added
(€/000)
Item 2017 2016 Item 2017 2016 10 Interest income and similar revenues 14,759,711 15,964,800 180 b) other administrative expense 20 Interest expense and similar charges -4,461,650 -5,657,789 (excluded indirect taxes and duties and donations) -4,394,287 -4,985,238 40 Fee and commission income 7,663,454 6,778,422 ECONOMIC VALUE DISTRIBUTED TO SUPPLIERS -4,394,287 -4,985,238 50 Fee and commission expense (excluded external networks’ expense) -999,959 -943,706 180 a) staff expense (included external networks’ expense) -7,201,202 -9,564,942 A 70 Dividend income and similar revenue 314,807 405,223 ECONOMIC VALUE DISTRIBUTED TO EMPLOYEES AND SUPERVISED WORKERS -7,201,202 -9,564,942 80 Gains and losses on financial assets and liabilities held for trading 1,075,435 1,205,730 330 Minority Interests -312,501 -463,781 B 90 Fair value adjustments in hedge accounting 57,344 -7,786 Net profit attributable to shareholders - - 100 Gains and losses on disposal of: 98,963 641,573 ECONOMIC VALUE DISTRIBUTED TO SHAREHOLDERS - - a) loans -433,732 -60,244 180 b) other administrative expense: indirect taxes and duties -736,032 -1,125,980 b) available-for-sale financial assets 533,353 699,106 290 Tax expense (income) related to profit or loss from continuing operations: current c) held-to-maturity investments 10 0 tax, adjustment to current tax of prior years, reduction of current tax for the year -595,982 -448,152 d) financial liabilities -668 2,711 ECONOMIC VALUE DISTRIBUTED TO PUBLIC BODIES & INSTITUTIONS -1,332,014 -1,574,132 110 Gains and losses on financial assets/liabilities at fair value through profit or loss -91,007 -80,187 180 b) other administrative expense: donations -8,828 -5,564 130 Impairment losses on: -2,412,669 -12,790,521 a) loans -2,090,607 -11,929,784 Net profit allocated to the charitable funds 0 0 b) available-for-sale financial assets -334,642 -707,377 ECONOMIC VALUE DISTRIBUTED TO COMMUNITY -8,828 -5,564 c) held-to-maturity investments 6,387 204 B. TOTAL ECONOMIC VALUE DISTRIBUTED -13,248,832 -16,593,657 d) other financial assets 6,193 -153,564 C. TOTAL ECONOMIC VALUE RETAINED -6,565,196 8,871,317 150 Premiums earned (net) 0 0 160 Other income (net) from insurance activities 0 0 A. The economic value distributed to employees and supervised workers excluded expenses for financial advisors. 220 Other net operating income 1,035,651 1,094,975 B. For the proposals to the Shareholders’ Meeting on the distribution to shareholders please refer to the specific Board of Directors’ reports in relation. 240 Profit (loss) of associates: gains or losses on disposal -7,485 -14,342 270 Gains and losses on disposal of investments 99,835 495,837 310 Total profit or loss after tax from discontinued operations 2,681,598 630,111 A. TOTAL ECONOMIC VALUE GENERATED 19,814,028 7,722,340
S. 2 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 3 Supplement Main partnerships → Main partnerships and affiliations and affiliations1
Legal Entity Organization Description Legal Entity Organization Description UniCredit SpA Utenti Pubblicità Associati (UPA) UPA is owned and operated by companies with UniCredit SpA CSR Manager Network Italia CSR Manager Network is the Italian national a common interest in resolving concerns related association for corporate social responsibility to advertising. UPA is aligned with the Istituto professionals dell’Autodisciplina Pubblicitaria (IAP) in its efforts European Financial Services Round Table (EFR) EFR is an organization of chairmen and chief to defend and promote responsible advertising executive officers from Europe’s leading banks and as a vehicle for consumer information, market insurance companies that contributes to European competition and social welfare public policy debates about financial services and Assonime Assonime is an association of companies that financial stability studies issues related to Italy’s economy and Ministero dell’Interno - Of2cen, Of2cen is a European project against advanced works to improve its industrial, commercial, Polizia Postale e delle Comunicazioni cyber-crime administrative, tax and currency legislation CERT Finanziario Italiano (CERTFin) CERTFin is a public-private cooperative initiative to Valore D Valore D is an Italian association of more than 150 increase the capacity of cyber-risk management in national and multinational companies. Its mission banking and financial services and the resilience is to increase and support female representation in of the Italian financial system to cyber-attacks and top positions at major Italian companies security incidents Executive Corporate Learning Forum (ECLF) The ECLF is a community of senior executives from Financial Services Information Sharing and Analysis FS-ISAC, the global financial industry’s main major global corporations. The community has Center (FS-ISAC) resource for cyber and physical threat intelligence the strategic responsibility to foster large-scale analysis and sharing, is unique in that it was learning and transformation processes created by and for members and operates as a Italian Association of Investor Relations (AIR) AIR is a professional association of investor member-owned nonprofit entity relations executives in Italy that promotes Global Credit Data (GCD) GCD is a nonprofit initiative, owned by more the professional stature of its members while than 50 member banks worldwide, to help banks spreading awareness of their role within a variety measure their credit risk of financial institutions Italian Banking Association (ABI) ABI’s temporary working groups assist the UN Global Compact Global Compact Network Italy The Global Compact is a strategic policy initiative, Health & Safety working group association’s activities by performing technical Foundation promoted by the United Nations at national level analysis of specific issues; these working groups via local networks, for businesses committed to disband when their respective objectives are aligning their operations and strategies with 10 reached universally accepted principles related to human rights, labor, anticorruption practices and the UniCredit Bank AG Verein für Umweltmanagement und Nachhaltigkeit VfU is an industry-specific body for environmental environment in Finanzinstituten e.V. (VfU) management at financial institutions London Benchmarking Group (LBG) LBG is the internationally recognized standard for Joblinge Joblinge is an initiative to support young people measuring corporate community investment with difficult backgrounds (e.g., crime, drug addiction, lack of education) by giving them access The United Nations Environment Programme UNEP FI is an initiative promoted by the United to qualification programs Finance Initiative (UNEP FI) Nations that addresses pressing, current issues in sustainable finance Klimapakt Münchner Wirtschaft Effective The Klimapakt Münchner Wirtschaft is part of climate protection needs pioneers the Integrated Climate Protection Action Program CDP (former Carbon Disclosure Project) The CDP promotes understanding of the potential in Munich, in which large companies pledge to impacts of climate change on shareholder value voluntarily reduce their CO2 emissions by at least International Integrated Reporting Council (IIRC) – The IIRC is a global coalition of regulators, 40,000 tons by the end of 2017; as a signatory to Business Network investors, companies, standard setters, non- this climate pact, UniCredit Bank AG participates governmental organizations, and accounting in the “Energy Efficiency Networks” initiative to professionals that works to establish integrated achieve the climate and energy policy objectives of reporting and thinking into mainstream business the Federal Republic of Germany practices
1. Each UniCredit subsidiary with a banking license is generally a member, where they exist, of the local economic chamber and the local banking association.
S. 4 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 5 Supplement Supplement → Main partnerships and affiliations → Main partnerships and affiliations
Legal Entity Organization Description Legal Entity Organization Description UniCredit Bank klimaaktiv klimaaktiv develops and provides quality UniCredit Bank SA Professional Women’s Network Romania (PWN PWN Romania is part of PWN Global, a Austria AG standards, education and training for professionals, Romania) worldwide nonprofit association that supports in addition to advice information and a large women in reaching their professional objectives partner network; it also gives advice and through online and face-to-face programs (e.g., cooperates with a large network of partners mentoring), events and professional and business The European Money and Finance Forum (SUERF) SUERF is a member-based association aimed at enhancement tools bringing together financial practitioners, central National Association for Information Systems ANSSI aligns efforts and builds on the experiences bankers and academics to analyze, discuss and Security (ANSSI) of information security professionals for the understand financial markets and institutions, the promotion of standards and best practices in their monetary economy, the conduct of regulation and field monetary policy Romanian Banking Institute (RBI) RBI’s primary objective is to improve the Museum for Social and Economic Affairs The Museum for Social and Economic Affairs professional training and specialization of staff (Gesellschafts- und Wirtschaftsmuseum) aims to educate the public in social and economic from the financial/banking sector, in line with history and facts, featuring meaningful graphical the strategy determined by the National Bank of representations of statistics and illuminating talks Romania, and in cooperation with the Romanian by staff that present information clearly and simply Banking Association and with the programs Austrian Society for Environment and Technology ÖGUT is a nonprofit organization that works approved by the Board of Directors (ÖGUT) to stimulate discussion and innovation on UniCredit Bank Foreign Investors Council (FIC) The FIC is a business association that assists Serbia environmental issues through the involvement of Serbia Jsc in embracing and developing a modern market NGOs, businesses and government economy The Financial Markets Association (ACI) ACI is a leading nonprofit, non-political association Responsible Business Forum (RBF) RBF Serbia is Serbia’s first network of socially of wholesale financial market professionals responsible companies. It inspires, supports and Austrian Business Council for Sustainable respACT is Austria‘s leading platform for corporate encourages companies to continually improve their Development (respACT) social responsibility (CSR) and sustainable impact on society, carrying out a series of activities development; it focuses on thought leadership, aimed at promoting the concept of CSR in the exchange of best practices, training and the business sector and the wider general public establishment of a national CSR network National Alliance for Local Economic Development NALED is an association of businesses, local UniCredit Bulbank The Council of Women in Business The Council of Women in Business is aimed at (NALED) governments and civil society organizations AD disseminating good management practices and working together to create better living and fostering the professional development of women working conditions in Serbia in small and medium-sized businesses and their Foundation Ana and Vlade Divac Collaboration on the Idea for Better Tomorrow growth in managerial positions project to support the development of social Bulgarian Association for People Management The BAPM is a non-governmental organization entrepreneurship (BAPM) established to develop the best professional UniCredit Banka Network for social responsibility of Slovenia Network for SR was established in May 2010 as a practices in the field of human capital Slovenija dd (Network for SR) platform for companies and other organizations management and development; in so doing, it aims is to promote social responsibility, both within to increase added value for organizations and to themselves and in the wider social sphere contribute to the enrichment of people’s potential AO UniCredit Bank Russian Union of Industrialists and Entrepreneurs RSPP is an independent non-governmental and professional performance (RSPP) organization that maintains regular contact Zagrebačka Banka Green Building Council of Croatia (GBC) The GBC is a nonprofit organization and with government authorities to keep them DD countrywide platform for the promotion of informed about the effectiveness of current sustainable construction practices laws and to protect the interests of industry and Croatian Business Council for Sustainable HR BCSD was founded in 1997 by leading Croatian entrepreneurship Development (HR BCSD) businesses to promote sustainable development in the private sector and represent business on the issue of sustainable development UniCredit Bank Joint Venture Association (JVSZ) This association assimilates the views of Hungary Zrt its members and supports them in meeting challenges related to business conduct and organizational decision-making
S. 6 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 7 Supplement Selection of 2017 awards → Selection of 2017 awards
Legal Entity Award Legal Entity Award UniCredit SpA #1 Trade Finance Provider in Central & Eastern Europe and #1 Trade Finance Provider in UniCredit Bulbank AD #1 Trade Finance Provider in Bulgaria by the Euromoney Trade Finance Survey 2017 Western Europe by the Euromoney Trade Finance Survey 2017 #1 in Cash Management by Euromoney Cash Management Survey 2017 #1 Bank for Liquidity Management in CEE for 2017 by Global Finance Best Bank in Bulgaria and Best Investment Bank in Bulgaria by EMEA Finance magazine #1 Bank for Cash & Liquidity Management in Central & Eastern Europe for 2017 by Treasury The World’s Best Securities Services Providers 2017 - Best Subcustodians - Country awards Management International (TMI) by Global Finance 5-Star-Manager for Cash Management in Western Europe and in Central & Eastern Europe Best Private Bank in Bulgaria by The Banker by Euromoney 5-Star-Manager for Cash Management Best Trade Finance Provider in Bulgaria by Global Finance #1 in Cash Management by Euromoney Cash Management Survey 2017 Top Employers Bulgaria certification by Top Employers Institute One of eight winners of The Innovators in Trade Finance 2017 for the category Process innovation by Global Finance Zagrebačka Banka DD #1 Trade Finance Provider in Croatia by the Euromoney Trade Finance Survey 2017 #2 Best Corporate Bond Bank for Willingness to Extend Balance Sheet by GlobalCapital #1 in Cash Management by Euromoney Cash Management Survey 2017 Bond Awards 2017 Best Trade Finance Provider in Croatia by Global Finance #2 Best Contributor of Secondary Liquidity in Corporate Bonds by GlobalCapital Bond UniCredit Bank Czech Republic #1 in Cash Management by Euromoney Cash Management Survey 2017 Awards 2017 and Slovakia, as The World’s Best Securities Services Providers 2017 - Best Subcustodians - Country awards #3 Most Impressive Corporate Bond Research by GlobalCapital Bond Awards 2017 by Global Finance Best Sub-custodian and Best Securities Lender in CEE by Global Finance Best Private Bank in Slovakia by The Banker Top Employers Italia and Top Employers Europe certification by Top Employers Institute UniCredit Bank Hungary Zrt #1 Trade Finance Provider in Hungary by the Euromoney Trade Finance Survey 2017 FinecoBank SpA #1 in Private Banking Awards for the category Digital Focus by Bluerating #1 in Cash Management by Euromoney Cash Management Survey 2017 Best team Private Banking 2017 by Le Fonti Awards UniCredit Bank SA #1 Trade Finance Provider in Romania by the Euromoney Trade Finance Survey 2017 Best Financial Brand, Italy; Most Innovative Financial Advisory Brand, Italy; Best Custom #1 in Cash Management by Euromoney Cash Management Survey 2017 Financial Advisory Brand, Italy; Most Trusted Financial Advisory Brand, Italy by Global Bank of the Year by The Banker Brands Magazine SEE Real Estate Award Winners for the category Bank by EuropaProperty UniCredit Bank AG Bank of the Year by The Banker UniCredit Bank Serbia Jsc #1 Trade Finance Provider in Serbia by the Euromoney Trade Finance Survey 2017 UniCredit Bank Austria AG #1 in Cash Management by Euromoney Cash Management Survey 2017 #1 in Cash Management by Euromoney Cash Management Survey 2017 The World’s Best Securities Services Providers 2017 - Best Subcustodians – Country awards by Global Finance The World’s Best Securities Services Providers 2017 - Best Subcustodians - Country awards by Global Finance Best Trade Finance Provider in Austria by Global Finance UniCredit Banka Slovenija DD The World’s Best Securities Services Providers 2017 - Best Subcustodians - Country awards UniCredit Bank dd #1 Trade Finance Provider in Bosnia & Herzegovina by the Euromoney Trade Finance Survey 2017 by Global Finance #1 in Cash Management by Euromoney Cash Management Survey 2017 AO Unicredit Bank Top Employers Russia and Top Employers Europe certification by Top Employers Institute Bank of the Year by The Banker
S. 8 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 9 Supplement Governance → Governance
UniCredit’s culture permeates both its operations and the way it conducts business, ensuring the proper addressing, coordination and control of Group activities and the management of related risks. This culture is grounded in a consistent system of rules, represented by: • the Integrity Charter, which states the deontological ethics that the Group recognizes as its own and expects to be Governance observed by all those who work to achieve the objectives of UniCredit and of the Group • the Code of Conduct, which defines general principles of conduct to help promote the Group’s culture of UniCredit SpA is an Italian company with shares listed on the Milan, Frankfurt and Warsaw regulated markets compliance by providing an outline of the compliance rules and the ethical professional standards and adopting the traditional management and control system and, as a bank, parent company of the UniCredit banking commitment to sustainability Group, it carries out, pursuant to the provisions of Section 61 of the Consolidated Banking Act, in addition to • the Codes of Ethics, adopted pursuant to Italian Legislative Decree 231/01 for the Holding Company and its Italian banking activities, governance and coordination ones, as well as control functions vis-à-vis the subsidiary banking, subsidiaries, which contain the rules with which all employees must comply in order to ensure that their conduct financial and instrumental companies within the banking Group. is always guided by criteria of fairness, collaboration, loyalty, transparency and mutual respect, as well as to avoid conduct that could constitute offences and crimes as defined in Italian Legislative Decree 231/01 The overall corporate governance framework of UniCredit1 has been defined according to current provisions, also of • the Global Rules, which are Group rules issued by UniCredit – coherently with the GMGR principles – in exercising a regulatory nature, and the recommendations of the Italian Corporate Governance Code for listed companies.2 its guidance, coordination and control functions to discipline activities deemed as significant in terms of compliance with the legal and regulatory provisions in force and/or in terms of risk management UniCredit is also subject to the provisions contained in the Supervisory Regulations issued by Bank of Italy and, in • the Global Rules are classified into three different document types: detail, with regards to the corporate governance issues, to the relevant Supervisory Regulations on banks corporate - Global Policies (GP), which contain behavioral and methodological principles, guidelines and rules issued by governance in being. the Holding Company when exercising its guidance, coordination and control functions, as well as the general framework of responsibilities between the Holding Company and the recipient Legal Entities UniCredit, as issuer of shares also listed on the Frankfurt and Warsaw regulated markets, also fulfils the legal - Global Process Regulation (GPR), which describe the key elements for the discipline of processes classified by the and regulatory obligations related to listings on said markets as well as the provisions on corporate governance parent company as Global due to relations among activities, responsibilities and supporting tools contained in the Polish Corporate Governance Code issued by the Warsaw Stock Exchange. Notwithstanding that, - Global Operational Regulation (GOR), which provide detailed technical, operational or methodological the UniCredit corporate governance structure is not influenced by non-Italian legal provisions. instructions issued by the parent company • service contracts between UniCredit and its related subsidiaries, which formally regulate the provision of intercompany services and ensure transparency regarding the services provided and the related compensation. Governance framework UniCredit encourages all its staff, external collaborators and commercial partners to be inspired by the principles Governance structures of transparency and sound management. This approach complies with current legislation and is in line with the fundamental principles governing the pursuit of the set objectives. UniCredit has adopted the so-called traditional management and control system based on the existence of two corporate bodies whose members are appointed by the Shareholders’ Meeting: the Board of Directors, in charge of UniCredit’s corporate governance adheres to current rules and regulations as well as to the recommendations laid the strategic supervision and the management of the company, and the Board of Statutory Auditors, responsible out in the Italian Corporate Governance Code for listed companies. UniCredit has developed a governance system for supervising management. Legal accounting supervision is entrusted by the Shareholders’ Meeting to an external that is regularly verified and updated to ensure that UniCredit complies with the evolving regulatory environment, audit firm, on proposal by the Board of Statutory Auditors, in compliance with relevant current laws. operating and markets practices, which is continuously monitored in order to verify its implementation level. This traditional management system, envisaging specific obligations for the Shareholders’ Meeting, allows for the Components of UniCredit’s governance include: clear exchange of views between management and shareholders on fundamental elements of governance. These • the Articles of Association, which set forth corporate governance provisions aimed at ensuring the proper elements include appointing and removing directors, appointing members to the Board of Statutory Auditors, operation of corporate management granting a mandate for the external auditing to an audit firm, approving all connected fees. They also encompass • the Regulations for the Shareholders Meeting, governing the conduct of ordinary and extraordinary meetings and, the approval of financial statements, the allocation of profit, the resolutions on the remuneration and incentive mutatis mutandis, meetings of special categories of shareholders policies and practices provided for by the current provisions as well as the criteria to determine the compensation • the Corporate Bodies Regulations, governing the function and competencies of the Board of Directors and of to be granted in the event of early termination of employment or early retirement from office. the Board of Statutory Auditors, in compliance with relevant legal and regulatory provisions, and the UniCredit Articles of Association, also incorporating the principles and criteria set out in the Italian Corporate Governance The Board of Directors and Board of Statutory Auditors members are appointed by the Shareholders’ Meeting Code for listed companies on the basis of a proportional representation mechanism (voto di lista). This voting system features lists of the • the Group Compensation Policy, establishing an approach consistent with sustainable remuneration and its candidates who are competing against one another to ensure the election of minority shareholders representatives. standardized implementation across UniCredit, with specific reference to senior management The structure of the above-mentioned corporate bodies ensures they are gender-balanced in compliance with • the Group Managerial Golden Rules (GMGR), which are guidelines for principles of governance within UniCredit, current regulations and provisions. outlining its organizational model and establishing managerial and functional responsibilities for all key processes that ensure also the implementation of its strategic plan. The UniCredit Board of Directors is composed of 17 members, including the Chairman and the Chief Executive Officer, and their term of office will expire on the date of the Shareholders’ Meeting called upon to approve the 3 1. Refer to the Report on Corporate Governance and Ownership Structure, available to the public on the Company website’s governance section, for more 2017 financial statements. information on the UniCredit corporate governance system. 2. Since 2001, UniCredit has adopted the Italian Corporate Governance Code for listed companies, that according, inter alia, to the major international markets’ experience, identifies the corporate governance standards and best practices for listed companies recommended by the Italian Corporate Governance Committee - based on transparency, accountability and a long-term perspective - to be applied according to the comply or explain principle that requires the explanation in the 3. Refer to the procedures specified in Clause 20 of the Articles of Association, available to the public on the Company website’s Governance section, for more Report on Corporate Governance and Ownership Structure of the reasons of failure to comply with one or more recommendations contained in its principles or criteria. information on the appointment process.
S. 10 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 11 Supplement Supplement → Governance → Governance
In compliance with the current provisions of both law and regulations, also concerning the maximum number Board self-evaluation of directorships that directors may hold, the Board of Directors establishes its qualitative and quantitative composition deemed optimal for the effective completion of the duties and responsibilities entrusted to the In compliance with the provisions contained in the Bank of Italy Supervisory Regulations on banks’ corporate supervisory body by law, by the Supervisory Provisions and by the UniCredit Articles of Association. The Board also governance, and also pursuant to the provisions of the Italian Corporate Governance Code for listed companies, the establishes the requirements that the UniCredit directors shall meet, in addition to possessing those envisaged by Board of Directors undertakes on an at-least annual basis a regular self-evaluation process focused on the adequacy current laws and regulatory provisions. of the Board itself and Board Committees in terms of composition and functioning, tangibly measured in specific theme-based areas, with special reference to those relevant to healthy and prudent management. The Board, before the appointment of the supervisory body, informs the shareholders about the composition deemed to be optimal in order for the choice of the candidates to take into consideration the expertise required. In particular, it is focused on: It goes without saying that shareholders may carry out their own assessment on the best composition of the • qualitative and quantitative composition, size, degree of diversity, professional training, experience (including supervisory body and file candidacies consistent with the same, giving the reasons for any difference vis-à-vis the managerial), seniority in the present post, a guaranteed balance of non-executive and independent members, analyses carried out by the Board. adequacy of the appointment processes and selection criteria, and ongoing professional development • meeting sessions, frequency, duration, the degree and form of attendance, sufficient time available to dedicate As regards the qualitative and quantitative composition of the Board of Directors and the profile for candidates to to the assignment, the relationship of trust, cooperation and interaction among members, awareness of the role the position of Director, the maximum number of directorships as well as the gender composition criteria for the covered, and the quality of debate on the Board. supervisory body, reference is made to the document Qualitative and Quantitative Composition of the UniCredit SpA Board of Directors, which is published on the Company website’s Governance section. The self-assessment process is undertaken with the assistance of an external consultant chosen taking into account his/her/their skills, the professional experience acquired by him/her/them in corporate governance, and the The composition of the Board in office quantitatively and qualitatively corresponds to the theoretical profile. Also need to be neutral, objective and independent in judgment; these are the hallmarks of the self-assessment process. in light of the information given by the persons concerned, the requirements concerning professional experience, integrity and independence,4 gender balance, and the maximum number of directorships that Directors may hold Up to now, the Board’s activities concerning environmental and social issues have not been the object of any as per the desired levels indicated by the Board in its profile approved in March 2015 recalling the provisions of evaluation. the CRD IV Directive (Directive 2013/36/EU dated June 26, 2013), were accounted for. More specifically, all of the areas of competence were represented in the Board; all of the Directors had at least two of the required areas of competence and, on average, the Directors had six areas of competence. Induction initiatives and recurring training
The positions held by the Board Members in other companies listed on regulated markets (both in Italy and In UniCredit a permanent induction program is active for the Board members, also for the benefit of the Board of abroad), as well as in financial services companies, banks, insurance companies or other large companies, is Statutory Auditors members, based on three year cycles connected to the Board mandate, with the aim of ensuring reported in the Report on Corporate Governance and Ownership Structure. an ad hoc training on a continuous basis that takes in account both their individual and collective needs.
In order to support the Board of Directors, also pursuant to the provisions of the Italian Corporate Governance Code The induction program, which is put in place with the support of an external consultant, includes both sessions for listed companies, four committees5 are established, vested with research, advisory and proposal-making powers aimed to facilitate the introduction of new Directors and trainings on a continuous basis aimed to preserve in time diversified by sector of competence: the background of technical skills necessary to perform their role with awareness. • the Internal Controls & Risks Committee • the Corporate Governance, Nomination and Sustainability Committee Furthermore, the activation of individual training plans is expected in case it should be deemed necessary to • the Remuneration Committee strengthen the knowledge of specific techniques and experiences, also with the aim to integrate the diversity level • the Related-Parties and Equity Investments Committee. and the whole level of experience of the Board of Directors.
The Internal Controls & Risks Committee, the Corporate Governance, Nomination and Sustainability Committee During the 2017 topics of strategic importance, also linked to the digital competencies, as well as of business and the Remuneration Committee have been set up in compliance with the provisions contained in the Bank and innovation, knowledge of macroeconomic scenarios, development of markets as well as legal and regulatory of Italy Supervisory Regulations on banks’ corporate governance envisaging three specialist committees – one ones have been the object of training sessions and were examined in detail, with the aim to assure awareness and on appointments, one on risks and one on remuneration – while the Related-Parties and Equity Investments knowledge of the risk profile adopted by the Group. Committee, established for overseeing issues concerning transactions with related-parties and with associated parties, as well as issues concerning investments in non-financial equities, has been set up in compliance with the Furthermore 4 off-site meetings have been organized with the Directors and the Top Management, open also to the relevant CONSOB regulatory provisions and the Bank of Italy Supervisory Regulations. Statutory Auditors, dedicated to the Group strategy and to the check of its planning , as well as areas concerning the drafting of the strategic plan. Sustainability issues were also included in a specific training session, with The above mentioned committees may operate according to the procedures considered appropriate and may, particular focus on non-financial information reporting and environmental, social and governance trends. inter alia, divide into sub-committees.
4. The number of independent directors in office is above the minimum required by current regulatory and statutory provisions (12 out of 17 under UniCredit’s Articles of Association and the Italian Corporate Governance Code, 16 out of 17 under Legislative Decree No. 58/1998, 16 of whom are non-executives). 5. Refer to the relevant area of the corporate website and to the Report on Corporate Governance and ownership structure available to the public on the Company website’s Governance section for more information on the functions performed by the UniCredit Board Committees.
S. 12 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 13 Supplement Supplement → Governance → Governance
Sustainability Governance In particular, the EMC discusses topics of a strategic nature relating to: • Group Performance Management at consolidated (Group) level (e.g., budget, quarterly results) The Corporate Governance, Nomination and Sustainability Committee supervises sustainability issues linked to • aligning the Group on key issues related to capital, risks and liquidity UniCredit’s activities, including its interactions with all of its stakeholders. The Group Environmental and Social • commercial and business strategies related to areas with a strong international and cross content (e.g., payments, Council (GESC) proposes the Group Environmental and Social Strategy, its annual objectives and related activities multichannel, CRM) to the Executive Management Committee (EMC) and the CEO for approval. Furthermore, the GESC oversees the • external customer satisfaction implementation of UniCredit’s environmental and social initiatives and commitments.6 In 2017, the GESC met twice • regulatory developments and Internal Control System matters with strong international and cross content to discuss the Group Environmental and Social Strategy. • HR and COO issues as well as Group strategic projects with strong international and cross content.
The EMC can discuss both Group/cross-Country issues and specific matters of regional character. Organizational and governance structures (as of 31.12.2017) Board and senior management compensation The CEO is the only executive director who sits on the Board of Directors, and part of his remuneration is linked to UniCredit Group’s organizational and business model maintains a divisional structure for the governance of the sustainability of UniCredit financial results. All other board members are non-executive directors, and are not Corporate Investment Banking business/products and business in the CEE Countries, as well as overall control beneficiaries of incentive plans utilizing stock options or, more generally, of any plan that makes use of financial over COO/Global Banking Services functions, thereby ensuring the autonomy of the Countries/Banks for specific instruments. Remuneration for members of the administrative and auditing bodies of UniCredit is represented only activities in order to guarantee increased proximity to the client and faster decision-making processes. by a fixed component, determined on the basis of the importance of the position and the time required for the performance of assigned tasks. This policy applies to non-executive directors as well as statutory auditors. The organizational model for UniCredit SpA, approved by the Board of Directors, delegates the following responsibilities: The approach to compensation for UniCredit’s top managers, as detailed in the Group Compensation Policy, is • the Chief Executive Officer (CEO) maintains direct supervision of the definition of Group Strategy, Risks, performance-based, market-aware and aligned with our business strategy and stakeholder interests. As announced Compliance, Lending, Human Capital, the optimization of structure costs, and the main operating activities at the UniCredit Capital Markets Day, held in London on December 13, 2016 to present the Transform 2019 • the General Manager is responsible for all business activities (Retail, Corporate, Global CIB, Asset Gathering and strategic plan to analysts and investors, the variable remuneration for the CEO and General Manager is entirely relevant Countries), focusing on the ongoing development of client services, maximizing cross-selling, leading the based on the 2017-2019 Long Term Incentive Plan, tied to the strategic plan’s targets. Group’s digital strategies, and defining the new service model of the Bank • the Chief Operating Office, overseen by two co-Heads (co-Chief Operating Officers), leads the oversight of More details on the compensation for management leaders and for the members of the administrative and operations, with specific focus on Costs and IT & Operations; in particular, the two co-Heads are respectively auditing bodies of the Group are reported in the Group Compensation Policy.7 To ensure competitiveness and responsible for Finance & Cost Management and for IT & Operations, Security and Internal Controls effectiveness of remuneration, as well as transparency and internal equity, the principles of sustainable conduct • the CIB Division, overseen by two co-Heads directly reporting to the General Manager, focuses on multinational and performance define the key pillars of the Group Compensation Policy. The Compensation Policy framework customers, selected large corporate clients with strong potential demand for investment banking products, is designed to assure the consistency of the remuneration elements and systems, while also conforming to our and customers that are Financial and Institutional Groups (FIG), attending to the following Global Lines: Global Group’s long-term strategies and principles of sound risk management. The Group Compensation Policy, as Transaction Banking (GTB), Global Financing & Advisory (F&A), Markets, and internationalization activities proposed by the Remuneration Committee, is submitted for approval to the Board of Directors and, subsequently, • in the Italian perimeter, the Italy co-Heads directly report to the General Manager, and are responsible for the to shareholders at the Annual General Meeting. definition of commercial banking business strategies and the assignment of such strategies to the territories and client segments (Family, First, Business First, Corporate and Private Banking) • the CEE Division, directly reporting to the General Manager, coordinates the Group’s activities in the countries of Central and Eastern Europe, aligning them to a single comprehensive business vision in the region • Group Institutional & Regulatory Affairs, directly reporting to Chief Executive Officer, as well as the functions referred to as Competence Lines (Planning, Finance & Administration, Risk Management, Lending, Legal, Compliance, Internal Audit, Human Capital and Identity & Communication) oversees the guidance, coordination and control of UniCredit’s activities and manages the related risks • the CEO is also supported by a senior management body, named the Executive Management Committee (EMC); the EMC is set up, with consultative functions, to ensure an effective steering, coordination and control of Group business as well as an effective alignment of the Holding Company with the different businesses and geographies.
6. Refer to the 2016 Integrated Report for more information. 7. Refer to the Group Compensation Policy on our website (www.unicreditgroup.eu) for more information.
S. 14 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 15 Supplement Risk Management → Risk Management and Compliance and Compliance Implementation of our environmental, social and reputational risk sector policies
Managing environmental and social risks Certain sectors and activities require a specialized approach to ensure that transactional and related risks are properly addressed. We have developed detailed guidance policies for sectors relevant to UniCredit that are Sound risk management requires a deep understanding of many types of risk, including environmental and social susceptible to environmental and social risks. risks and their impacts on financial results and the balance sheet. These policies take into account generally accepted international agreements, guidelines and standards (including Through its Global Policy - Group Credit Operations (chapters on Project Finance and Structured Trade and Export the International Finance Corporation Performance Standards, the World Bank Group Environmental, Health and Finance) and other special policies and practices, UniCredit assesses and manages not only traditional economic Safety Guidelines and the principles of the UN Global Compact), as well as other practices widely employed by specific and financial impacts, but also non-financial impacts. These include environmental, social and other reputational industries and affected stakeholders. Our Group considers these international agreements, guidelines and standards risk impacts associated with the environmental and social performance of its customers. as representative of best practices for assessing and avoiding potential environmental and social impacts. Through the implementation of appropriate management and mitigation measures on the part of our clients and counterparts, With this in mind, UniCredit implements and integrates the Equator Principles (EP), whenever applicable, into its UniCredit aims to avoid or limit the risks associated with transactions and projects in these sectors. project financing transactions and has adopted detailed special policies regarding sectors that present significant environmental and social risks. Our Group monitors portfolio exposures and other environmental, social and related UniCredit’s current environmental, social and reputational risk policies apply to a number of sectors, including water reputational risk issues within certain industries. In keeping with our commitments, we work to disseminate across infrastructure (dams, in particular), nuclear energy and coal-fired power generation. The criteria for these policies are our Group a strong culture of risk management that prioritizes environmental and social issues. regularly reviewed so that all emerging environmental and social standards and any additional relevant impacts are taken into account in financial decision processes. When necessary, external experts are involved in these processes.
How we mitigate environmental, social and reputational risks Environmental, social and reputational risk policies
Policy Latest version Objective C C C Defense/Armaments Dec. 2011 To regulate financial involvement with companies from the defense/armaments industry in order to minimize social, reputational and credit risk Nuclear Energy June 2013 To regulate financial involvement with and address the challenges posed by the R • A financial industry benchmark for • projects transactions evaluated nuclear energy sector in order to minimize environmental, social, reputational and R C determining, assessing and managing • projects financed credit risk environmental and social risk in projects • people were trained in EP Mining July 2014 To establish standards and guidelines that address the risks associated with financing mining operations • Framework of sector-specific • transactions were screened for Water Infrastructure Feb. 2012 To establish standards and guidelines that address the risks associated with C R standards/ guidelines to identify, assess environmental, social and reputational financing large water infrastructure projects such as dams C and mitigate environmental, social and risk issues (vs. 400 in 2016) Coal-fired Power Nov. 2014 To establish standards and guidelines that address the risks associated with reputational risks/impacts on an • people were trained on UniCredit financing coal-fired power production ongoing basis with our clients sector policies over the last three years These policies apply directly to UniCredit SpA and are addressed to all Group legal entities that engage – whether R R M • Specific high risk cases/transactions • transactions were screened through lending or other forms of financial assistance – with the above-listed sectors. Their adoption is subject to analysis not covered under the defined for environmental, social and monitoring by the parent company’s CRO functions. C M C policies reputational risk issues C • Ad hoc analysis leveraging the data analytics of external Environmental, UniCredit’s policies define specific internal processes to consistently identify, assess and monitor potential Social and Governance (ESG) providers environmental and social risks. Screening records and tools are implemented in our standard risk and compliance check to support the performance of comprehensive due diligence. These analysis utilize information derived from business intelligence providers on environmental, social and governance risks inherent to the most sensitive • Customized monitoring system to • Repository with ESG news in R R sectors, including those regulated by special policies, and other relevant sectors. R M identify and analyze the reputational lang ages covering ee s risk in the financial sector through colleag es use it for daily C external sources screening activities Transactions are generally screened by the legal entity responsible at both the transactional and the client level. A R R • Awareness and knowledge of potential • Quarterly analysis presented/discussed record of the screening process is integral to the compliance assessment and must be completed before approval is R R C reputational risks across the Group in Group Operational Reputational granted. In 2017, roughly 615 transactions were assessed for potential environmental, social and other reputational Risk Committee (GORRIC) C issues. More than 480 of these transactions were related to our sector policies.
Decisions regarding transactions that have been assessed as high risk, as defined by applicable policies and the competent committees of the local legal entities, are submitted to the parent company for approval. Assessments must be updated regularly as part of the annual credit lines renewal process.
Transactions that carry intrinsically higher risks require an independent expert or third-party review (e.g., Environmental and Social Impact Assessment - ESIA or equivalent) in order to ensure a rigorous aproach to identifying, quantifying and, where appropriate, mitigating and monitoring environmental and social risks.
S. 16 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 17 Supplement Supplement → Risk Management and Compliance → Risk Management and Compliance
Internal reporting on exposure and risk indicators is managed by risk functions at both the local legal entities and Equator Principles - Number of projects financed by risk category the parent company. On a quarterly basis, the Group Operational and Reputational Risk function submits to the Risk categoryA 2017B 2016B 2015B Group Operational and Reputational Risk Committee a report on the non-binding opinions that have been issued Category A 4 7 7 over the period. This report provides an overview of the number of transactions declined, approved and approved Category B 13 10 10 with conditions during the risk assessment process. Category C 3 13 10 Total 20 30 27
A. Category A: projects with potential significant adverse social or environmental risks and/or impacts that are diverse, irreversible or unprecedented. Category B: projects with potential limited adverse social or environmental risks and/or impacts that are few in number, generally site-specific, largely Implementation of the Equator Principles reversible and readily addressed through mitigation measures. Category C: projects with minimal or no social or environmental risks and/or impacts. UniCredit has adopted the Equator Principles (EP) as a financial industry benchmark for determining, assessing and B. Projects financed by UniCredit Bank AG, UniCredit SpA and UniCredit Bank Austria AG. managing environmental and social risk in projects. The EP are primarily intended to provide a minimum standard for due diligence to support responsible risk-related decisions. Equator Principles – Number of projects financed by risk category and sector, 2017
Sector Category A Category B Category C In 2003, UniCredit was among the world’s first adopters of the ten principles that constitute the EP. Since then, ResourcesA 2 0 0 our Group has actively contributed to the framework’s development. These activities have provided UniCredit with Energy 2 9 3 valuable experience, facilitating the implementation of the framework Groupwide and contributing to our further Infrastructure 0 4 0 engagement with stakeholders. Total 4 13 3
The EP1 apply globally to Project Finance Advisory Services, Project Finance, Project-Related Corporate Loans and A. Including oil & gas, mining and metals. Bridge Loans across all industry sectors. We work in partnership with our clients to identify, assess and manage environmental and social risks and impacts in a structured way on an ongoing basis. The EP are based on the Equator Principles – Number of projects financed by risk category and region, 2017 International Finance Corporation (IFC) Performance Standards on Environmental and Social Sustainability and the Region Category A Category B Category C World Bank Group Environmental, Health and Safety (EHS) Guidelines. Europe: EU 0 11 3 Extra EU 1 2 0 An EP Advisory team oversees and supports the implementation of the EP across the Group. The framework of Americas 0 0 0 the EP is embedded in our various internal policies, providing a minimum standard for due diligence and impact Africa 3 0 0 mitigation and supporting sustainable decision-making Groupwide. These policies include our Global Policy - Asia and Australia 0 0 0 Group Credit Operations chapters on Project Finance and Structured Trade and Export Finance. Aside from roles, Total 4 13 3 responsibilities and principles, these policies define the EP process for evaluations of specific projects. Furthermore, an EP-based Non-Binding Opinion (NBO) is incorporated into our approvals process, as is an internal Equator A Principles Screening Tool that focuses on category A and B projects.2 Equator Principles – Number of projects financed in Designated Countries and projects subjected to Independent ReviewsB, 2017 Independent environmental and social experts are consulted to assist our transaction team, where applicable, in Category A Category B Category C accordance with the EP. Loan document covenants are reviewed by the specialized transaction team, internal legal Designated Country 3 13 3 department and, where appropriate, technical, environmental and social specialists. We regularly conduct special Independent Review 4 12 3 workshops and training sessions to enhance our capacity to implement the EP within our organization. In 2017, roughly 100 employees from the risk competence line and business divisions, including Corporate and Investment A. Designated Countries are those countries deemed to have robust environmental and social governance, legislation systems and institutional capacity designed to protect their people and the natural environment. The list of Designated Countries may be found on the EP Association website. Banking, attended four interactive EP workshops and training sessions tailored to the needs of different audiences. B. An Independent Review is a review of the Assessment Documentation, including the ESMPs, ESMS and Stakeholder Engagement process documentation Participants received comprehensive instructions that introduced them to the EP framework and the underlying carried out by an Independent Environmental and Social Consultant. World Bank Standards, leveraged peer-to-peer knowledge-sharing, and provided practical examples for evaluating financial, environmental and social risks, among other topics. In 2017, UniCredit, along with two other commercial banks, arranged the financing for the construction of theArror Multipurpose Dam (the “Project”) in Kenya. The Project is supervised by the Kerio Valley Development Authority, The EP Advisory team, together with Group Sustainability & Foundations, represents UniCredit in the EP using funds borrowed by the Government of Kenya through the National Treasury of the Republic of Kenya. A joint Association. Also in 2017, we continued to be engaged in the work of the association and to participate in specific venture between two Italian companies, Cooperativa Muratori & Cementisti - C.M.C. di Ravenna and Itinera SpA, has Working Group initiatives that align with our strategy, geographical scope and business footprint. the contract to develop the Project.
Equator Principles – Projects evaluated, financed and advised, 2017 The Arror Multipurpose Dam will consist of a plant with a hydropower capacity of 60MW and a reservoir catchment area of 185km², providing water for domestic and irrigation purposes and covering an area of 6,000 hectares. It is located Projects evaluated Projects financedA Projects advised 97 20 2 in Kenya Elgeyo-Marakwet County, in the Kerio River watershed, one of the longest rivers in Kenya, originating near the equator. Flowing north through the East African Rift area, the river discharges into Turkana Lake.The Project is part of the A. Includes 18 Project Finance transactions and 2 Project-Related Corporate Loan. Government of Kenya’s National Water Master Plan 2030, which aims to: (i) create a large-scale resource for irrigation and drinking water, (ii) increase sustainable energy production and efficiency for local use, and (iii) foster improvement of agricultural activities, fisheries and ecotourism.The Project is expected to become operational in 2023. 1. Refer to the EP framework at http://www.equator-principles.com for more information. 2. Projects with potential significant (Category A) or limited (Category B) adverse social or environmental risks and/or impacts. Refer to the EP framework for more information.
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The Project has been subject to a formal Environmental and Social Impact Assessment (ESIA) process, which Compliance included Environmental and Social Management Plans and Monitoring Plans and was performed by a local Kenyan consultancy. Based on the ESIA and further information, Golder Associates, an international consulting group reviewed the potential environmental and social risks and impacts of the Project, proposed to assign it a Project How compliance is managed at UniCredit Category A and developed with the borrower, the banks and the Italian export credit agency SACE SpA (SACE) an Environmental and Social Action Plan (ESAP), which defines measures to mitigate the identified environmental and The evolving international scenario and an ever more demanding regulatory framework make the Compliance social risks and impacts. The ESAP’s implementation and the environmental and social status of the Project are to function increasingly crucial and central for UniCredit. be monitored during the life of the financing by the environmental team of the Project company as well as by the banks and SACE, with the support of the Project’s monitoring consultant. Under the responsibility of the Group Compliance Officer, the Compliance function’s mission is to monitor the management of compliance risk. This entails ensuring the correct application of/and compliance with the Our Group participated in the financing of the construction of theKocaeli Integrated Health Campus PPP, a regulatory framework, its consistent interpretation at Group level, as well as the identification, evaluation, public-private project in a strategic program to bring Turkey’s existing hospital infrastructure up to international prevention and monitoring of the overall compliance risks of the Group or respective Legal Entities – as well standards. UniCredit and its local affiliate, Yapı Kredi, served as the sole Financial Advisor and Mandated Lead as to assist the Group, its management, the Corporate Bodies and employees in carrying out their activities in Arranger to the company with the concession from the Turkish Ministry of Health, which specifies a 36-month compliance with mandatory rules, internal procedures and best practices. construction period and a 25-year operating period. The majority of payments for the term of the 18-year loan are expected to commence in 2020, after construction of the 1,180 bed campus in the Izmit district of Kocaeli Province In order to accomplish such goals, Group Compliance defines methodologies, rules, procedures, trainings and is completed. The Environmental and Social Impact Assessment (ESIA) for the project, which was conducted by monitors their implementation and adherence across the Group. an external consultant working on behalf of the lenders, includes an Environmental and Social Action Plan (ESAP) that defines actions to mitigate environmental and social risks caused by, among other things, the campus’ Moreover, within its mission Compliance proactively supports the business ensuring prompt advisory to timely sensitive location next to a village. Other exemplary mitigating measures are a stringent stakeholder engagement, tackle and address new regulations, by detecting and mitigating emerging risks impacting the Group, and implementation of workers’ and community grievance mechanisms, and implementation of strong security continuously enhancing awareness on conducting business in a sustainable/ethical way over time. standards that meet the needs of the forensic rehabilitation hospital on the campus. The Environmental and Social Due Diligence (ESDD) Report prepared for the benefit of the Mandated Lead Arrangers, using ESIA results, provided The Compliance function is embedded in the Group internal control system framework, aiming at detecting, a gap analysis to assess the project’s compliance with international environmental and social standards. Based on preventing and mitigating the non-compliance risk , and at preserving Group’s reputation, its customers’ the ESDD, UniCredit assigned an Equator Principles category B to the project. By means of the loan documentation, confidence and its business sustainability (corporate value creation/consolidation), through: implementation of the ESAP action items and regular independent monitoring and reporting are provisioned over • strategic guidance (policies and advisory) the lifetime of the project. • control and monitoring (compliance risk assessment, second level controls and monitoring activities on Compliance areas of responsibility).
Moreover, by regularly interacting with the other control functions, especially in the prompt detection of emerging risks, it ensures harmonization and alignment among control functions.
Finally, in terms of supporting Group Transform 2019, Compliance is focusing on: • timely addressing regulatory challenges • further improving risk discipline • streamlining its internal processes and overall governance mechanisms.
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2017 updates to key compliance policies Regarding market transparency: • GP - Dodd-Frank Act Compliance Group Governance: this rule defines principles and policies in order to ensure Regarding client-centric conduct: that the Group complies with the provisions set forth by the Dodd-Frank Act that affect the Group • Global Policy (GP) - Provision of investment services and activities under Markets in Financial Instruments • GOR - Market Abuse: Trade Surveillance & Case Management: this rule sets out the requirements for trade Directive (MIFID II): this rule provides UniCredit SpA and Group Companies with common standards and minimum surveillance and case management for an entity to be able to effectively monitor its trading activities to identify requirements when providing investment services and activities falling within the scope of MIFID II, with the potential market abuse exclusion of ancillary services • GOR - Preparation and Distribution of Investment Research: this rule establishes the principles for producing, • Global Operational Regulation (GOR) - Outside Business Interests: this document is intended to outline the reviewing and distributing investment research (hereafter Research); rules governing content, valuations, operational procedures to be followed by employees, with contracts under Italian law, pursuing in their free recommendations, presentation, plagiarism, disclosures, disclaimers, conflicts of interest management, Research time, outside business work activities and/or outside business interests which are known to be forbidden unless independence, complaints and record keeping; rules governing specific situations such as contact with the media, explicitly authorised by the employer. capital markets Research, distribution of third party Research and interaction with other business areas, issuers under coverage and other clients Regarding anti-money laundering, financial crimes and sanctions: • GOR - Investment Recommendations: this internal regulation defines the principles and rules for the framework by • GP - Anti-Money Laundering (AML) and Countering of Terrorist Financing (CTF): this rule is intended to provide which the Group manages its risks in respect of the production and dissemination of investment recommendations as a high-level framework for employees to identify potential money laundering and terrorist financing risks and defined in market abuse regulations and establishes minimum standards to meet necessary disclosure obligations to assist them in determining how to manage those risks. It also provides general information on the measures • GP - Financial Benchmarks: this rule defines Group internal principles and policies to regulate the contribution to, taken by Group companies to identify, mitigate and manage money laundering and terrorist financing risk the provision of, and the use of financial benchmarks according to Regulation (EU) 2016/1011 on indices used as • GOR - AML Standards for Correspondent Banking: these standards define principles and rules for the sound benchmarks in financial instruments and financial contracts or to measure the performance of investment funds. management of UniCredit’s correspondent banking network, aiming to ensure compliance with relevant regulatory and legal requirements and protect the Group’s reputation by avoiding any appearance of impropriety Regarding governance: • GOR - AML Due Diligence Requirements for Customers: this rule provides the customer risk assessment and classification • GP - Code of Conduct: this code of conduct has been written in line with UniCredit’s 5 Fundamentals, and is standards, as well as the Know Your Customer requirements that legal entities must apply to their customers therefore aligned with our Group values, and lists the principles that all employees and partnering third parties • GOR - AML/CTF Transaction Monitoring: this rule provides requirements and procedures to all Group entities and of UniCredit must comply with in order to ensure high standards of professional conduct and integrity related to to all members of strategic, control and executive bodies, employees, tied agents and temporary employees their activity in or on behalf of UniCredit. of the Group involved in the execution, support and monitoring of customer transactions, with the purpose to identify suspicion of money laundering and terrorism financing • GOR - Payment & Customer Screening: this rule sets out the minimum requirements for payment and customer screening across the Group. As set out in the Global Sanctions Policy, the Group is firmly committed to complying Policies with all applicable sanctions regulations in every jurisdiction in which it operates • GOR - Financial Sanctions: this global rule defines the principles and policies for setting out the framework by Anti-money laundering which the Group manages its risks in respect of financial sanctions and establishes minimum standards for the controls which should be implemented throughout the Group Regulators today are very focused on the satisfaction of Anti-Money Laundering requirements by banks. The Global • GP – Anti-Corruption (update): this rule aims to clearly articulate UniCredit’s commitment to prohibiting bribery Policy on Anti-Money Laundering and Countering of Terrorist Financing (hereinafter the AML Policy), builds on and corruption, to define principles for identifying and preventing potential bribery and corruption, to clearly the Group Compliance Framework Global Policy and sets out more detailed policy statements on the key pillars communicate anti-bribery and anti-corruption principles both to internal and external stakeholders and to provide a of the Group’s AML Programs, such as risk assessment, customer due diligence, transaction monitoring, record framework for a Group-wide Anti-Corruption Programme. The Policy has been published at the beginning of 2018. keeping and training, while also taking into consideration the EU Fourth Anti-Money Laundering Directive. The AML Policy sets out the framework by which the Group manages its money laundering and terrorist financing risk and establishes minimum standards for the legal entities’ Anti-Money Laundering (AML) programs.
Topic Key Achievements 2017 Priorities 2018 Anti-money laundering 1. Roll out of Pilot Group AML Risk Assessment 1. Extension of correspondent banking Methodology transaction monitoring solution to CEE 2. Implementation of a transaction monitoring tool for Countries correspondent banking in UniCredit SpA, UniCredit 2. Performance of annual Group AML Risk Bank AG and UniCredit Bank Austria AG Assessment 3. Implementation of the new requirements under the 3. Centralization of the KYC activities for EU Fourth AML Anti-Money Laundering Directive to Correspondent Banking and Corporate all relevant Group legal entities Banking customers 4. New Group Second Level Controls Catalogue issued 4. Specialized AML certification for staff and rolled out to Group legal entities members of various AML functions 5. New and updated AML policies and regulations: Global within the Group AML/CTF Policy (update); Global Operational Regulation 5. Implementation of new Global - AML Standards for Correspondent Banking (update); Operational Regulation - AML/CTF Global Operational Regulation AML Due Diligence Transaction Monitoring Requirements for Customers (new); Global Operational Regulation - AML/CTF Transaction Monitoring (new)
S. 22 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 23 Supplement Supplement → Risk Management and Compliance → Risk Management and Compliance
Financial sanctions For the purposes of the global policy, an act of corruption is defined as the giving, offering, promising, receiving, accepting, demanding or soliciting of money, gifts or other benefits in order to obtain or retain an undue advantage The Global Policy on Financial Sanctions, initially issued in August 2012, and more recently updated in February in the course of business activities, irrespective of: 2016, defines the principles and rules for setting out the framework by which the Group manages its risks in • whether the recipient of the act of corruption is a domestic or a foreign individual, a public official or a private individual respect of financial sanctions. The aim of the policy is to support compliance with relevant regulatory and legal • where the act is committed requirements, international and local, avoid any appearance of impropriety, protect the Group’s reputation, and • whether the result of such act entails an actual undue advantage or the improper performance of a function or activity. define principles and rules for restricting dealings with countries, entities and individuals that are subject to financial sanctions by, among others, the European Union (EU), United States (US) Office of Foreign Assets Control All employees are responsible for complying with the Global Policy, any corresponding local internal rules and (OFAC), United Nations (UN), and any national provisions in countries in which Group legal entities are located. procedures and all applicable anti-corruption laws in the performance of their duties.
Topic Key Achievements 2017 Priorities 2018 All employees shall report to the Local Anti-Corruption Officer or the Local Head of Compliance any instances Financial sanctions 1. Roll out and implementation of the Risk Assessment 1. Finalize the ongoing assessment of actual or attempted acts of Bribery and Corruption they become aware of, whether the act of Bribery and for Financial Sanctions, covering inherent to residual of existing payment and customer risks, which will be conducted on an annual basis screening filters in Italy, Germany and Corruption is offered, given or received. 2. Continued enhancement of existing sanctions Austria frameworks 2. Execute regular payment and customer Any report must be made according to the established internal process but in any case in the first instance to 3. Update of existing policies and regulations: screening tools configuration tests as Global Operational Regulation - Financial Sanctions per annual compliance planA the Local Anti-Corruption Officer and, where actual or suspected money laundering is involved, also to the local in July 2017, and Global Operational Regulation - 3. Review of financial sanctions policies AML Officer. Failure to make such a report may give rise to individual criminal liability on the part of the relevant Payment and Customer Screening in November 2017 and regulations as per annual employee in certain jurisdictions, as well as exposing the Group to potential legal or regulatory action. Potential 4. Testing of the payment and customer screening filters, compliance planA covering 38 tests in 27 entities (including branches) 4. Performance of annual Group Financial acts of bribery and corruptions may be reported also under the Global Compliance Policy – Whistleblowing, if 5. Enhancement of the framework of financial sanctions Sanctions Risk Assessment locally implemented.4 on Russia and Iran for the Group and dissemination of 5. Roll out of new online financial the process throughout UniCredit sanctions training 6. Update of the online financial sanctions training The following mechanisms have been put in place to monitor the effectiveness of the Group’s approach to program preventing corruption and bribery: escalation procedures employed for significant and strategic issues; quarterly management of information requested from each Group Legal Entities; analysis and testing of the results of A. Refer to the Risk Management and Compliance chapter for more information. activities related to the management of second level controls; compliance risk assessments performed for each regulatory area in all legal entities within the Compliance function’s jurisdiction; and internal audit reviews. The last two mechanisms (compliance risk assessments and internal audit reviews) result in risk mitigation actions that Anti-corruption must be completed on time to ensure the management of identified risks.
UniCredit has zero tolerance towards acts of bribery and corruption and prohibits them in any form, both direct and The major anti-bribery and anti-corruption challenges the Group faces are: indirect. UniCredit will not tolerate its employees or third parties in any kind of relationship with UniCredit being • proper identification and prioritization of bribery risks involved in acts of bribery and corruption. • monitoring of the risk of bribery and control failures due to a lack of awareness and understanding of policies and procedures By committing to zero tolerance to bribery and corruption UniCredit commits that every behaviour in breach of this • proper keeping of books, records and accounts to determine potentially corrupt payments, if any principles and every concern raised as for possible act of bribery and corruption will be assessed and where appropriate • monitoring the risk of failing to report actual or suspected incidents of bribery, both internally and to the external investigated and disciplinary action will be taken in addition to the sanctions contained in the applicable regulations. No authorities employee will suffer demotion, penalty, or other adverse consequences for refusing to pay acts of corruption or reporting • monitoring the risk that an intermediary engages in bribery on behalf of the Group actual or attempted acts of corruption even if such refusal may result in the Group losing business. • monitoring the risk that a Third party pays bribes on behalf of the Group • monitoring the risk that a Third party pays kickbacks to Group employees The above principle is enforced by an adequate risk management processes and implementation of a Group-wide • ensuring that due diligence has been carried out before a proprietary investment to avoid the Group becoming Anti-Bribery and Anti-Corruption Programme. liable for corruption • appropriate and proportionate gifts and business hospitality expenditures to avoid improper influence or the The Group’s approach to preventing corruption and bribery is set out in the Global Compliance Policy on impression of intent to solicit improper influence Anti-Corruption and its associated Global Operational Instructions. The global policy sets minimum standards • appropriate management of charity, sponsorship and donations to avoid the impression that they were made to of anti-corruption compliance throughout the Group.3 Whenever local rules in a country of operation are stricter ingenerate the expectation of obtaining/retaining a business advantage (political donations in any tangible or than global policy, those stricter local rules apply. Each local entity must appoint a person responsible for its intangible form are forbidden) Anti-Bribery and Anti-Corruption Programme - the Local Anti-Corruption Officer; Group Legal Entities which do not • appropriate management of employment offers to avoid the impression that they were made to ingenerate the have a Compliance function - due to their size - may appoint a joint Anti-Corruption Officer shared among all such expectation of obtaining a business advantage. entities or the role may be performed by the parent entity’s Anti-Corruption Officer. Moreover each local entity is responsible for the development and implementation of an effective local anti-corruption program. The global policy and its operational instructions are periodically reviewed.
3. Refer to the Anti-Corruption Policy on our website (www.unicreditgroup.eu) for more information. 4. Refer to the Whistleblowing part of this section for more information.
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Risks of noncompliance are managed through a dedicated risk assessment process and quarterly second level Antitrust controls. In the event of noncompliance, corrective actions to mitigate actual significant risks are undertaken. Our Group’s Policy on Anti-corruption is addressed to entities operating in UniCredit core markets.5 UniCredit has always been highly committed to compliance with antitrust rules.
UniCredit may be held liable for acts of corruption committed by Third parties acting on behalf of our Group, Following the antitrust policies pursued and enacted in the past, in 2016 UniCredit deployed the Compliance whether or not it had knowledge of the acts in question. Therefore Third parties are subject to an anti-corruption Antitrust Program at Group level (hereinafter Program or CAP), aimed at: due diligence and assessment, both before being engaged and on an ongoing basis, in order to mitigate this risk. • increasing the governance of antitrust matters at both company and Group level • strengthening compliance culture and enhancing Group’s reputation on the markets With reference to communications and training, the Global Compliance Policy on Anti-Corruption is addressed to • more effectively managing the risk of both antitrust breaches and penalties. all relevant Group companies and applies to all members of strategic, control and executive bodies, employees, tied agents (e.g., financial advisors) and temporary employees of the Group. UniCredit SpA’s strategic and The CAP has been deployed in UniCredit SpA and the main banks of the Group operating in the European executive bodies are made aware of the existence of and updates to the Global Policy and are responsible for Union and has been shaped and calibrated on the basis of each bank’s specific features, as business type complying with it. These bodies also participate in our dedicated training programs and are subject to mandatory and size as well as target markets, and is subject to monitoring and periodic review to ensure its continued anti-corruption training. effectiveness.
Topic Key Achievements 2017 Priorities 2018 As part of the Program, in December 2016 UniCredit adopted the new Group Policy Single Antitrust Rulebook Anti-corruption 1. A new whistleblowing campaign and a 1. Implementation of the reviewed Group communication campaign about the new Code of policy and Group Operational Rule - Antitrust and Unfair Commercial Practices (hereinafter SAR), applicable to all Group companies and Conduct were launched for UniCredit employees 2. Rollout and execution the updated employees. The SAR provides practical rules of conduct and advice to correctly manage meetings with 2. The Group policy on anti-bribery and corruption and Group Control Catalogue competitors and unannounced inspections carried out by antitrust authorities. related standard procedures were reviewed in order 3. Perform updated risk assessment of to update them to international best practices training courses 3. Compliance second level controls on intermediaries 4. Rollout specific communication campaign Topic Key Achievements 2017 Priorities 2018 were enhanced with specific periodical overview of on anti-bribery and corruption Antitrust 1. Following the success of the Program, in 2017 UniCredit 1. Refreshing Compliance Antitrust the main intermediaries at Group level 5. Deploy additional initiatives according extended the CAP to further Group companies, including Program in UniCredit and the main to the Tone from the Top’s 2018 plan non-EU banks of the Group and foreign branches of banks of the Group in 2019 regarding anti-bribery, anti-corruption UniCredit SpA and UniCredit Bank AG and whistleblowing 2. SAR approved in almost every Group company directly and indirectly controlled by UniCredit SpA for which SAR is relevant Organizational and management model pursuant to Italian Legislative Decree 231/2001
UniCredit SpA has adopted an organizational and management model pursuant to Italian Legislative Decree 231/01 (administrative liability of legal entities, companies and associations). The organizational and management model (hereinafter the Model) is integrated within the rules, procedures and control systems already in place and applied in UniCredit SpA. The bank’s organizational framework consists of the set of rules, structures and procedures that ensure the proper functioning of the Model; it is a structured, comprehensive system that is in itself a tool to oversee the prevention of unlawful conduct, including those envisaged by the specific legislation on the administrative liability of entities. In particular, the bank has identified the following tools to plan the formulation and implementation of business decisions and carry out relevant checks: the rules of Corporate Governance; the Internal Controls System; the system of authorities and delegation; the Integrity Charter; and the Code of Conduct. In addition, with specific reference to the risks deriving from L.D. 231/2001, the bank has formalized the specific decision protocols that describe the principles of conduct and control rules aimed at preventing the offences and established additional rules of conduct in the Code of Ethics pursuant to Italian Legislative Decree 231/01.
In drawing up the Model, the bank took explicit account of the Italian Banking Association - ABI guidelines. The Model was updated in December 2017, due to slight changes in bank’s organization and changes in external regulation (i.e., a new definition of corruption between individuals).
All relevant Italian legal entities have also implemented their own organizational and management model based on UniCredit SpA’s recommendations.
5. Recipient Legal Entities (further to the listed Entities, each Entity can distribute the Global Policy to additional own subsidiaries): Anthemis EVO LLP; AO UniCredit Bank; Bavaria Servicos de Representacao Comercial Ltda; Cordusio SIM SpA; Cordusio Società Fiduciaria per Azioni; Crivelli Srl; FinecoBank SpA; I-Faber SpA; Nuova Compagnia di Partecipazioni SpA; SIA Unicredit Leasing; Trieste Adriatic Maritime Initiatives Srl; UniCredit (UK)Trust Services Ltd; UniCredit Bank ad Banja Luka; UniCredit Bank AG; UniCredit Bank Austria AG; UniCredit Bank Czech Republic and Slovakia, as; UniCredit Bank Hungary Zrt; UniCredit Bank Ireland Plc; UniCredit Bank SA; UniCredit Bank Serbia Jsc; UniCredit Banka Slovenija dd; UniCredit Bpc Mortgage Srl; UniCredit Bulbank AD; UniCredit Business Integrated Solutions SCpA; UniCredit Factoring SpA; Unicredit Global Leasing Export GmbH; UniCredit International Bank (Luxembourg) SA; UniCredit Leasing SpA; UniCredit OBG Srl; UniCredit Subito Casa SpA; UniCredit Turn-Around Management GmbH; Yapi ve Kredi Bankasi AS; Zagrebačka Banka DD.
S. 26 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 27 Supplement Supplement → Risk Management and Compliance → Risk Management and Compliance
A Main legal actions regarding anti-competitive behavior, antitrust and monopoly practices Conflicts of interest
Country Description of main legal actions, 2017 Romania On November 27th, 2017, the Competition Council has dawn-raided the headquarters of several banks UniCredit Group is committed to identifying and properly managing all potential conflicts of interests (COI), with (including UniCredit Bank S.A.), financial non-banking institutions, leasing companies (including particular regard to: UniCredit Leasing Corporation IFN S.A. and UniCredit Fleet Management), professional associations 1. conflicts in provision of investment services and activities and employers association activating in the financial services market, this being one of the authority’s most complex actions. The dawn-raids were conducted within the framework of two investigations 2. conflicts linked to banking services and activities opened the Competition Authority on operational leasing services market and, respectively, on the 3. organizational conflicts financial services and consumer credit market. The investigations are currently on-going. 4. conflicts arising from employees’ personal interests.
UniCredit has implemented a Global Policy on Conflicts of Interest, which sets forth principles and rules to assist Country Update on legal actions listed as ongoing in the 2016 Integrated Report employees in the identification and management of conflicts of interest. Under the policy, UniCredit provides Italy In April 2016, the AGCM notified the extension to UniCredit (and to 10 more Banks) of the general information on the measures the Group has taken to detect, manage and record such conflicts of interest. proceedings I/794 ABI/SEDA opened in January vis-à-vis the Italian Banking Association (ABI). The proceedings are aimed at ascertaining the existence of alleged concerted practices with reference to the Sepa Compliant Electronic Database Alignment system (SEDA). UniCredit has adopted a distinctive model to identify and manage various forms of conflicts of interest. The model On April 28, 2017, the AGCM issued a final notice whereby it confirmed that the practices carried employs the following steps: out by the ABI, UniCredit and the other banks in connection with the adoption of the SEDA service model of compensation constituted an anti-competitive practice and therefore a violation of 1. identification of events referable to the company that could generate conflicts of interest to the company, its European competition regulations. With such notice, the AGCM ordered the parties to cease the employees, customers, and of the structures to which the events relate infringement, submit a report evidencing the relevant measures adopted by January 1, 2018 2. identification of the applicable conflicts of interest to the company itself to the AGCM, and refrain from enacting similar practices in the future. Given the fact that the infringements were minor in light of the legislative framework, the AGCM did not impose any 3. identification of the organizational measures suitable to mitigate/neutralize the various applicable conflicts of monetary or administrative sanctions against UniCredit (or the other 10 banks) also in consideration interest and the additional processes requested (e.g., escalation and disclosure) of the fact that, in the course of the proceeding, the ABI and the banks proposed a redefined SEDA 4. recording of conflicts of interest service remuneration model which, if correctly implemented by the banks, is expected to decrease the current SEDA costs by half, which benefits the enterprises utilizing the service and, ultimately, 5. controls for the effectiveness and completeness of these COI-related processes. the end-users of the utilities. In light of the AGCM final notice, UniCredit decided to appeal the AGCM decision at the TAR (the Italian Regional Court). The appeal filed vis à vis the Italian Regional Court Topic Key Achievements 2017 Priorities 2018 is still pending. Conflicts of Interest Groupwide focus on the implementation of the MiFID 1. Greater focus on conflicts of interest Hungary The Hungarian Competition Authority (GVH) began a cartel investigation of 7 Hungarian 2 rules, which introduce more detailed processes for generated by outsourcing banks, including UniCredit Bank Hungary Zrt, in connection with foreign currency mortgage the identification and management of the conflicts of 2. Simplification of the control catalogue loan repayments (early repayments). In 2013, the GVH fined UniCredit Bank Hungary Zrt. HUF interests, entering them into force by January 1, 2018 related to conflicts of interests 306,300,000 (roughly €1 million). The Bank appealed against such decision and the appeal was 3. Further analysis and links for conflicts of rejected at first and second instance. interest-related regulations focused on In December 2016 in the frame of judicial review the Supreme Court (Curia) instructed the products, such as Prospectus Directive Competition Authority to conduct a new procedure over fines it had levied on Banks. The and Insurance Distribution Directive Competition Authority reimbursed the fine paid by the Bank in 2013. New procedure is ongoing. In 2012, the GVH began a cartel investigation on the Hungarian Banking Association, the International Training Centre for Bankers and 38 Hungarian Banks (including UniCredit Bank Hungary Privacy management Zrt), all of which participating in the BankAdat system, the interbank database for Hungarian credit institutions. At the end of the investigation, UniCredit Bank Hungary Zrt was not fined but the Hungarian Banking Association was fined HUF 4 billion (roughly €13 million) and the International UniCredit ensures its compliance with data protection rules by adopting the principles set forth in the Italian Training Centre for Bankers was fined HUF 15 million (roughly €48,000). In the event they cannot legislation implementing the Directive 95/46/EC as well as in the upcoming new General Data Protection Regulation fulfill their payment obligations, participating Banks that were the objects of the investigation (including UniCredit Bank Hungary Zrt) will be responsible for the payment jointly and severally. “GDPR” (EU Regulation 2016/679) entering into force on May, 25th 2018. The Group’s internal data rules, particularly HBA and most of the affected Banks appealed against the decision, the court action is still ongoing. the Global Policy on Privacy (which replaced the previous version of the Global Compliance Guidelines on Privacy) issued in March 2015, will be updated in 2018 to comply with the GDPR. A. Starting from this Integrated Report, the table refers only to anti-competitive behavior, antitrust and monopoly practices. Within the scope of data protection activities, the Compliance Risk Assessment and the second level controls performed by UniCredit are aimed to identify, monitor and manage compliance risks in this regulatory area. Furthermore, for specific data security issues, Compliance works with the Security Governance function to incorporate certain flows of controls performed by them on compliance risks related to data processing issues.
Topic Key Achievements 2017 Priorities 2018 Privacy management Launched project to address new GDPR provisions, with Homogeneously implementing the new Group Compliance, HR, ICT Security and UBISA leveraging Regulation within the Group by completing local structures to analyze the Regulation and define the following actions by May 2018: which requirements must be implemented for the Group - appointment a Data Protection Officer to comply with incoming provisions (if needed) - fully record processing activities - privacy impact assessment (PIA) - implementation of new data subject rights (such as data portability) - updating of privacy documentation (such as information notice and consent form)
A. UniCredit Business Integrated Solutions (UBIS) is the Group’s global services company, which carries out activities related to Information and Communication Technology (ICT), Operations, Real Estate, Security and Procurement.
S. 28 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 29 Supplement Supplement → Risk Management and Compliance → Risk Management and Compliance
Whistleblowing The law also establishes the nullity of the retaliation or discriminatory dismissal of the reporting person (whose identity cannot be disclosed) as well as the change of duties or other retaliation or discriminatory measure taken In 2011, we adopted a system, implemented at Group level, that provides employees with a way to report against the reporting party. conduct that violates the law or the bank’s internal rules (i.e., whistleblowing). Any employee can make use of this mechanism to report a reasonable suspicion of unlawful conduct or that potentially harmful or detrimental Concerning to the whistleblowing process of UniCredit SpA, analysis confirmed the substantial compliance of the behavior has occurred or may occur. bank’s internal practices with the requirements of the new law.
The Group’s approach to whistleblowing is set out in a specific global compliance policy. In order to promote a Employees are further informed about UniCredit’s whistleblowing policy by a specific section on the corporate corporate culture based on ethical behavior and good corporate governance, the Global Policy governs reports of intranet and by a brochure on the importance of the issue. Both detail how and when to make a whistleblowing unacceptable conduct by employees within the Group. report. The policy is intended to: A • grant a corporate environment where employees may feel free to make reports on unacceptable conduct Number of cases by category, 2017 • define adequate communication channels for the receipt, analysis and use of the reports. Total Closed cases CategoriesC casesB at 31/12/2017 The management of this process is designed to ensure the greatest possible confidentiality of the identity of the whistleblower and of the accused individual and to prevent any possible retaliatory or discriminatory behavior in response to the report. Out of which Pending cases Total real policy or at 31/12/2017 closed requirement For example, in Italy, UniCredit SpA has identified the Head of Compliance Italy as the person responsible for cases MiFID
breaches Anti-Trust & Protection & internal whistleblowing systems, who ensures that procedure is correctly followed. If the persons referred to above Abuse Market HR regulationsHR Conflict of Interest Financial SanctionsFinancial Banking Transparency Banking Failure to comply with are hierarchically and functionally subordinate to the person to whom the whistleblowing report relates or they other regulations (and Anti-Money Laundering inappropriate behavior) Privacy & Banking Secrecy Anti-Bribery Corruption and
themselves are alleged to be responsible for the violation or have a potential interest in the report that would Failure to comply with internal compromise their impartiality and independence of judgment, then the employee may contact Internal Audit 232 202 53 30 45 0 6 1 15 2 7 10 14 49 79 directly as the reserve function by sending the report to the Head of the Group Audit Department and the Country Italy Audit Department. A. This data is drawn from the following subset of Group legal entities: UniCredit SpA (included branches in Milan, London, New York, Shanghai, Guangzhou, Madrid, Paris); AO UniCredit Bank; Ba Ca Leasing (Deutschland) Gmbh; Cordusio SIM SpA; Cordusio Società Fiduciaria per Azioni; FactorBank Aktiengesellschaft; FinecoBank SpA; Mobility Concept GmbH; Ooo Unicredit Leasing; The channels (some of which are available 24 hours a day) provided by UniCredit SpA for employees to provide Schoellerbank Aktiengesellschaft; SIA UniCredit Leasing; UniCredit (UK) Trust Services Ltd; UniCredit Bank ad Banja Luka; UniCredit Bank AG (included branches in Munich, London, New York, Hong Kong, Singapore, Tokyo, Paris, Athens, Milan, Zurich, Vienna); UniCredit Bank Austria AG; UniCredit Bank Czech Republic and whistleblowing reports, including anonymously, are as follows: Slovakia, as; UniCredit Bank dd; UniCredit Bank Hungary Zrt; UniCredit Bank Ireland Plc; UniCredit Bank SA; UniCredit Bank Serbia Jsc; UniCredit Banka Slovenija • by phone, the UniCredit SpeakUp line allows the employee to leave a voice message report, with the option to dd; UniCredit Biztositaskoezvetito Kft; UniCredit Bulbank AD; UniCredit Business Integrated Solutions SCpA; UniCredit Consumer Financing EAD; UniCredit Consumer Financing IFN SA; UniCredit Factoring EAD; UniCredit Factoring SpA; UniCredit International Bank (Luxembourg) SA; UniCredit Leasing (Austria) report anonymously GmbH; UniCredit Leasing Corporation IFN SA; UniCredit Leasing Croatia doo za Leasing; UniCredit Leasing CZ as; UniCredit Leasing Hungary Zrt; UniCredit • on the website, where the UniCredit SpeakUp web service allows the employee to submit a written report, with Leasing Kft; UniCredit Leasing Slovakia as; UniCredit Leasing SpA; UniCredit Leasing Srbija doo Beograd; UniCredit Leasing, leasing, doo; UniCredit Operativ Lizing Kft; UniCredit Subito Casa SpA; Yapi ve Kredi Bankasi AS; Zagrebačka Banka DD; ZAO Locat Leasing Russia; ZB Invest doo. the option to report anonymously B. Of which 18 pending cases at the end of 2016. • by email, to the UniCredit Italy Whistleblowing email address C. Not inclusive of pending cases at the end of 2016. Categories refer to the classification that was made when the case was opened. A case could be classified in one or more category. • by letter, to the dedicated UniCredit Italy Whistleblowing postal address.
On November 15, 2017, Italy’s draft law for whistleblowing, which contains provisions for the protection of perpetrators of reports of crimes or irregularities that have come to light in the context of a public or private employment relationship, was definitively approved. This bill, Law n. 179/2017 was published in Gazzetta Ufficiale on December 14, 2017.
The law concerns the protection of workers, public or private, who report or denounce crimes or other illegal conduct which they have come to know about in the context of their employment relationship. The law contains an article dedicated to the public administration and another to the private sector.
For the private sector, which includes UniCredit SpA, the law lays out the organizational and management requirements of entities (Legislative Decree n. 231/01), saying that: • organizational models must provide one or more channels (of which at least one is suitable to guarantee online confidentiality) suitable for the transmission of whistleblowing reports • whistleblowing reports should be based on precise and concordant matters • organizational models must provide disciplinary sanctions against those who violate reporting measures and against those who carry out, with fraud or guilt, reports that prove to be unfounded.
S. 30 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 31 Supplement Stakeholder → Stakeholder Engagement
Macro Topic Main stakeholder Material topic Definition Boundaries for Main reference involvedA material topicsB chapter of the Engagement Internal External Integrated Report Business AllC Compliance Installing a culture of Group Customers Risk Fairness Culture compliance Regulators Management and Compliance Business All Fair Business Maintaining high standards Group Customers Risk Materiality matrix Fairness Behavior for fair business practices Investors Management and and expecting senior Compliance niC edit pp oac management and employees to treat all stakeholders R IC with fairness, respect and reciprocity, according to the
I Integrity Charter Business Customers Simplicity and Enhancing our trust and Group Customers Integration of Quality and value Fairness transparency credibility by proposing Strategic Pillars simple and easy to and Capitals Customer proximity Clear approach understand products/ Social & to markets services, as well as Relationship Simplicity and proactive, effective and Capital Compliance culture transparency Financial stability clear communications and transparent decision-making Financial Bank Big data education solidity processes air ine e avior Business Investors Clear Maintaining transparent Group Investors Integration of opulation gro th & aging societies Fairness Approach to relationships with financial Strategic Pillars Support to business National Markets markets by disclosing and Capitals Global arming in rastructure Human rights Research and Security information that is useful for Financial Capital innovation nvironmental impact Employment investors to understand our Social & Community proximity ork-life balance erformance management competitive positioning and Relationship bank business trends Capital Responsible finance l ays on-hyperconnectivity IU Efficiency All Bank Solidity Ensuring financial solidity Group Customers Governance Employees' Innovative bank and Solidity and resilience in the Investors Integration of development Diversity and inclusion uncertain economic scenario Strategic Pillars and Capitals Financial Capital mpo tance to stake olde s Lean and transparent organization Efficiency Customers Lean and Guaranteeing lean and Group Customers Integration of and Solidity Transparent efficient bank procedures Strategic Pillars Organization and transparent decision and Capitals making processes Social & Relationship Capital Efficiency Regulators Financial Building a long-term Group Regulators Integration of and Solidity Stability foundation for financial Strategic Pillars stability while supporting and Capitals customers in an uncertain Risk environment; providing Management & tangible support for Compliance regulatory discussions to Social & create a better financial Relationship system Capital Mac o opics Customer Customers Innovative Being proactive, acting Group Customers Integration of ine airne Experience Bank promptly and promoting Strategic Pillars Efficiency and solidity Innovation innovation and Capitals Intellectual Customer experience innovation Capital Positive impact on society Customer Customers Quality and Offering high quality Group Customers Integration of People development Experience value products and services that Strategic Pillars Emerging risks Innovation are good value for money and Capitals Social & Future trends integration Relationship Capital Customer Customers Customer Being close to customers, Group Customers Integration of Experience Proximity understanding their needs Communities Strategic Pillars Innovation and promptly providing local and Capitals families and companies with Social & a wide range of specialized Relationship products/services on request Capital
A. Main stakeholder group that raised and/or is impacted by the material topic. B. Reporting of data and information for topics that are material outside the organization is limited to the Group activities. The Geographical location where the topic is material refers mainly to the 14 Countries where the Group has significant operations (refer to the Report Structure of the Integrated Report for more information). Internal and External refers to the main subjects that impact the topic. C. Includes Colleagues, Customers, Communities, Investors, Regulators, Suppliers.
S. 32 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 33 Supplement Supplement → Stakeholder Engagement → Stakeholder Engagement
Macro Topic Main stakeholder Material topic Definition Boundaries for Main reference Macro Topic Main stakeholder Material topic Definition Boundaries for Main reference involvedA material topicsB chapter of the involvedA material topicsB chapter of the Internal External Integrated Report Internal External Integrated Report Customer Customers Support to Being close to companies Group Customers Integration of Emerging All Security Investing in a Group Customers Intellectual Experience Business by developing products Strategic Pillars Risks comprehensive, prompt and Regulators Capital Innovation and services that and Capitals effective ICT security Risk support their economic Social & management & growth (e.g. innovation, Relationship Compliance internationalization, research Capital Emerging All Human Rights Respecting and supporting Group Customers Risk and development) Risks human rights within our Regulators management & Positive Customers Responsible Committing to Group Customers Natural Capital sphere of influence, while Investors Compliance Impact on Finance environmental, social and Investors Social & ensuring our Group is not Society governance issues through Relationship indirectly complicit in human dedicated products in Capital rights abuse portfolio Emerging All Environmental Taking responsibility for the Group Customers Natural Capital Positive Communities Financial Helping citizens – customers Group Communities Social & Risks Impact potential direct and indirect Regulators Risk Impact on education and non-customers alike – Customers Relationship environmental impacts of Investors management & Society to improve their financial Capital our business decisions Communities Compliance knowledge and make more Future Employees Big Data Using analytics is likely Group Customers Integration of informed financial decisions Trends Customers to become increasingly Regulators Strategic Pillars Positive Communities Employment Contributing indirectly to Group Social & Integration significant over the next and Capitals Impact on raising employment levels Relationship decade, with positive and Intellectual Society by developing products and Capital negative implications Capital services that both support Future Employees Population Global population is Group Customers Social & ongoing business activities Trends Customers Growth and increasing with lengthened Relationship and help identify new Integration aging societies life expectancy Capital business opportunities Future Customers Always on Advances in communication Group Customers Integration of Positive Communities Research and Developing products and Group Customers Intellectual Trends - hyperconnec- technologies are already Strategic Pillars Impact on Innovation services to support research Capital Integration tivity causing far-reaching changes and Capitals Society and innovation intensive Social & to society and the economy Intellectual industries and to contribute Relationship Capital to social and economic Capital progress as well as the well- Future Customers Global A commitment to reduction Group Customers Natural Capital being of countries Trends Communities Warming of the average worldwide Communities Integration temperature Regulators Positive Communities Community Understanding territorial Group Communities Social & Investors Impact on Proximity issues and responding Relationship Society to local needs to better Capital support social development and positively impact communities Dialogue tools with stakeholders Positive Communities National Support development of Group Customers Social & Stakeholder group Principal dialogue tools Key company departments involved Impact on infrastructure national infrastructures Communities Relationship Society including roads, motorways, Capital Customers • Customer satisfaction assessment • Group Stakeholder Insight railroads, public offices etc. • Brand reputation assessment • Local Stakeholder Insight • Instant feedback • Local marketing teams People Colleagues Diversity and Fostering and improving a Group Human Capital • Mystery shopping development Inclusion culture of inclusion, fairness • Focus groups, workshops, seminars and respect by promoting equal opportunities in the Colleagues • People Survey of professional engagement • Group Stakeholder Insight workplace so all colleagues • Internal clients’ perceptions of headquarters • Global HR Management can maximize their potential services • Local HR • Group Intranet Portal • Group Internal Communications People Colleagues Work-life Demonstrating concern Group Human Capital • Departmental online communities development Balance for employees’ well-being and the balance between Investors/shareholders • Quarterly webcasts and conference calls to • Group Investor Relations their professional and present results • Group Sustainability for SRI investors personal lives; creating a • One-on-one and group meetings, calls work environment in which • Shareholders’ meeting everyone feels at ease and is Regulators • One-on-one and group meetings, calls • Group Institutional and Regulatory Affairs motivated to build positive Communities • Surveys • Group Stakeholder Insight relationships with customers • Social media • Group Identity and Communications People Colleagues Performance Developing systems based Group Human Capital • Local Identity and Communications development Management on transparent and fair mechanisms to ensure all employees are capable of performing to the best of their abilities People Colleagues Employees’ A commitment to enhancing Group Human Capital development Development colleagues’ professional skills and accelerating their professional development
S. 34 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 35 Supplement Human Capital → Human Capital Percentage of employees by employment tier and gender, 2015-2017
Employment tier and gender 2017 2016 2015 Top Management 1 Female 5.88% 10.53% 14.12% Portrait in numbers Male 94.12% 89.47% 85.88% Executive The data in this part of Supplement applies to UniCredit’s employees (in Head Count) as of December 31, Female 16.26% 19.17% 18.71% 2017-2016-2015. Our employee data does not include external staff (e.g., interns or consultants). The number Male 83.74% 80.83% 81.29% reflects all employees of fully and proportionately consolidated entities. The data represents 100 percent of the Middle Management population unless otherwise noticed. Female 30.74% 31.83% 31.74% Male 69.26% 68.17% 68.26% In 2016, the alignment to the Global Job Model and Global Banding has been further extended within the Group. Staff The decrease registered between 2015 and 2016 in number of Top managers reflects the roll-over of their new Female 57.64% 59.87% 60.75% definitions through the different legal entities. Male 42.36% 40.13% 39.25%
The sale of Bank Pekao and Pioneer Global Asset Management and their subsidiaries in 2017 may limit the comparison between 2016 and 2017. Starting from this report, data referred to Poland has been included in Other, also for 2016 (Head Count amounted to 18,997) and 2015 (Head Count amounted to 19,442). Percentage of employees by gender and contract type, 2015-2017
Gender 2017 2016 2015 2017 data shows a general decrease of the company’s overall population, mainly due to the reorganization of the Fixed-term Permanent Fixed-term Permanent Fixed-term Permanent Group through our strategic plan. This decrease has also occurred in the Group’s female presence indicators, due to Female 3.64% 51.29% 3.14% 53.91% 3.01% 54.81% actions such as the sale of Bank Pekao, which has a high number of female employees. Male 2.20% 42.86% 1.81% 41.15% 1.54% 40.64% Percentage and number of employees by country and gender, 2015-2017 Total 5.84% 94.16% 4.95% 95.05% 4.55% 95.45%
Country Female Male Head Count Head Count Head Count 2017 2017 2017 2016 2015 Italy 44.98% 55.02% 44,957 49,408 50,259 Percentage of employees by employment tier and age, 2016-2017 Germany 54.25% 45.75% 17,472 19,183 20,496 Employment tier 2017 2016 Austria 54.81% 45.19% 9,363 9,985 10,545 Up to 31-40 41-50 Above Total Up to 31-40 41-50 Above Total Bosnia and Herzegovina 72.20% 27.80% 1,694 1,704 1,681 30 years years years 50 years 30 years years years 50 years Bulgaria 77.40% 22.60% 4,566 4,534 4,574 Top Management 0.00% 0.00% 23.53% 76.47% 100.00% 0.00% 0.00% 31.58% 68.42% 100.00% Croatia 74.93% 25.07% 4,165 4,254 4,401 Executive 0.00% 5.91% 43.35% 50.74% 100.00% 0.69% 9.38% 44.69% 45.24% 100.00% Czech Republic 65.74% 34.26% 4,063 4,136 4,107 Middle Hungary 68.41% 31.59% 2,257 2,283 2,332 Management 0.92% 20.98% 41.95% 36.15% 100.00% 0.76% 21.37% 43.41% 34.45% 100.00% Romania 70.71% 29.29% 5,698 5,674 5,285 Staff 12.00% 26.44% 29.92% 31.64% 100.00% 11.53% 26.46% 30.45% 31.55% 100.00% Russia 67.94% 32.06% 4,722 4,790 4,597 Serbia 62.53% 37.47% 1,281 1,231 1,177 Slovenia 64.39% 35.61% 570 562 596 Percentage of employees leaving employment by reasons, 2015-2017 OtherA 58.13% 41.87% 1,507 21,077 26,924 Reason for leaving the Group 2017 2016 2015 Total 54.94% 45.06% 102,315 128,821 136,974 Retirement - employees who left to retireA 2.09% 5.14% 4.95%
A. In 2017, Other includes: Brazil, Ireland, Latvia, Luxembourg, Poland, Singapore, Slovakia, United Kingdom and United States of America. Restructuring - employees who left due to a common agreement or industrial plan negotiated with trade unions 45.47% 27.04% 14.28% Individual agreements - employees who left due to individual or one-to-one agreements 5.60% 10.07% 21.26% Percentage of employees by employment tier, 2015-2017 Employee resignation - employees who resigned 34.29% 37.95% 41.16% Employer dismissal - employees who left the bank involuntarily 3.69% 6.62% 5.82% Employment tier 2017 2016 2015 Other - all remaining reasons, including ending of temporary Top Management 0.02% 0.01% 0.06% contracts 8.85% 13.17% 12.52% Executive 0.40% 0.56% 0.58% Total 100.00% 100.00% 100.00% Middle Management 9.40% 9.25% 9.14% Staff 90.19% 90.17% 90.22% A. Retirements triggered by restructuring have been reported under restructuring rather than retirement. Total 100.00% 100.00% 100.00%
1. Numbers might not add up due to rounding reasons.
S. 36 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 37 Supplement Supplement → Human Capital → Human Capital
Turnover for incoming employees by country, 2016-2017A Turnover for outgoing employees by genderA and ageB, 2016-2017
Country 2017 2016 Gender 2017 2016 Number Percentage Number Percentage Number Percentage Number Percentage Italy 496 1.10% 676 1.37% Female 6,185 11.00% 5,816 7.91% Germany 352 2.01% 548 2.86% Male 5,904 12.80% 4,327 7.82% Austria 1,214 12.97% 365 3.66% Bosnia and Herzegovina 109 6.43% 123 7.22% Age 2017 2016 Bulgaria 556 12.18% 584 12.88% Number Percentage Number Percentage Croatia 237 5.69% 265 6.23% Up to 30 years 2,718 24.36% 2,660 19.71% Czech Republic 629 15.49% 630 15.23% 31 – 40 years 2,239 8.47% 2,465 7.39% Hungary 327 14.49% 335 14.67% 41 – 50 years 1,249 3.92% 1,422 3.48% Romania 1,269 22.27% 1,313 23.14% Above 50 years 5,883 17.89% 3,596 8.75% Russia 863 18.28% 951 19.85% Serbia 125 9.76% 153 12.43% A. Turnover rates for outgoing employees are calculated as follows: (Employees who left the Group during the year, by gender)/(Total employees by gender at the end of the year)*100. Slovenia 71 12.46% 18 3.20% B. Turnover rates for outgoing employees are calculated as follows: (Employees who left the Group during the year, by age)/(Total employees by age at the end of the OtherB 252 16.72% 853 4.05% year)*100. Total 6,500 6.35% 6,814 5.29%
A. Turnover rates for incoming employees are calculated as follows: (Employees hired during the year)/(Total employees at the end of the year)*100. DifferentialA between female and male employee gross salariesB by country and B. In 2017, Other includes: Brazil, Ireland, Latvia, Luxembourg, Poland, Singapore, Slovakia, United Kingdom and United States of America. employment tier, 2016-2017C The percentage represents the weighted averages of women’s average gross salary compared to men’s.
Turnover for outgoing employees by country, 2016-2017A Country 2017 2016 Executive Middle Staff Executive Middle Staff Country 2017 2016 Management Management Italy 86.95% 85.94% 88.51% 90.62% 86.44% 89.10% Number Percentage Number Percentage Germany 76.27% 84.59% 86.49% 74.03% 83.71% 86.42% Italy 4,493 9.99% 1,896 3.84% Austria 96.35% 90.14% 79.81% 92.80% 88.64% 83.29% Germany 1,412 8.08% 1,669 8.70% Bosnia and Austria 1,681 17.95% 1,155 11.57% Herzegovina 93.85% 94.69% 89.84% 96.90% 90.35% 91.35% Bosnia and Herzegovina 91 5.37% 95 5.58% Bulgaria 40.07% 92.29% 73.89% Not available 90.46% 73.43% Bulgaria 521 11.41% 622 13.72% Croatia 75.23% 90.10% 94.91% 71.84% 85.62% 88.62% Czech Republic Not applicable 75.02% 76.04% Not applicable 81.60% 74.92% Croatia 331 7.95% 408 9.59% Hungary Not applicable 95.49% 81.83% 49.67% 96.50% 84.17% Czech Republic 785 19.32% 607 14.68% Romania 57.32% 96.58% 83.40% 56.06% 100.62% 83.55% Hungary 334 14.80% 379 16.60% Russia 60.12% 89.83% 73.80% Not applicable 90.22% 74.51% Romania 1,160 20.36% 926 16.32% Serbia Not applicable 83.32% 82.46% 88.59% 100.07% 94.51% Russia 930 19.70% 758 15.82% Slovenia 73.26% 101.88% 98.52% 86.42% 112.81% 97.61% Serbia 78 6.09% 98 7.96% A. The ratios were calculated as follows: (Total gross salary of female employees/Total female FTE)/(Total gross salary of male employees/Total male FTE). Slovenia 63 11.05% 52 9.25% B. Gross salary: the full year fixed amount paid to an employee for performing his/her duties. It includes allowances provided related to specific positions. OtherB 210 13.93% 1,478 7.01% C. Data represents 82.2 percent of the population for 2017 and 81.7 percent for 2016. Total 12,089 11.82% 10,143 7.87% DifferentialA between female and male employee total remunerationB by country and A. Turnover rates for outgoing employees are calculated as follows: (Employees who left the Group during the year/(Total employees at the end of the year)*100. C B. In 2017, Other includes: Brazil, Ireland, Latvia, Luxembourg, Poland, Singapore, Slovakia, United Kingdom and United States of America. employment tier, 2016-2017 The percentage represents the weighted averages of women’s average remuneration compared to men’s.
Turnover for incoming employees by genderA and ageB, 2016-2017 Country 2017 2016 Executive Middle Staff Executive Middle Staff Gender 2017 2016 Management Management Italy 79.19% 85.11% 88.48% 83.75% 86.86% 89.32% Number Percentage Number Percentage Germany 67.38% 78.72% 83.94% 64.13% 77.15% 84.28% Female 4,021 7.15% 4,083 5.56% Austria 88.91% 88.79% 78.68% 97.14% 86.90% 82.43% Male 2,479 5.38% 2,731 4.93% Bosnia and Herzegovina 95.16% 94.46% 89.41% 88.61% 88.54% 90.13% Age 2017 2016 Bulgaria 39.57% 92.62% 73.84% Not available 92.92% 72.99% Number Percentage Number Percentage Croatia 76.92% 87.38% 94.79% 78.52% 83.55% 88.29% Up to 30 years 3,672 32.91% 4,109 30.45% Czech Republic Not applicable 71.58% 74.97% Not applicable 76.74% 73.29% 31 – 40 years 1,442 5.45% 1,857 5.57% Hungary Not applicable 95.89% 81.36% 42.89% 96.29% 83.45% 41 – 50 years 587 1.84% 535 1.31% Romania 47.33% 94.59% 85.35% 45.94% 96.83% 83.23% Above 50 years 799 2.43% 313 0.76% Russia 59.18% 88.16% 73.86% Not applicable 90.31% 74.03% Serbia Not applicable 81.93% 81.67% 84.60% 98.07% 93.37% A. Turnover rates for incoming employees are calculated as follows: (Employees hired during the year, by gender)/(Total employees by gender at the end of the year)*100. Slovenia 74.03% 100.70% 99.16% 87.20% 116.36% 97.18% B. Turnover rates for incoming employees are calculated as follows: (Employees hired during the year, by age)/(Total employees by age at the end of the year)*100. A. The ratios were calculated as follows: (Total remuneration of female employees/Total female FTE)/(Total remuneration of male employees/Total male FTE). B. Total remuneration: gross salary plus additional amounts such as bonuses including cash and/or available equity shares to reward individual performance and Company’s results and any other no one-off payments. C. Data represents 82.2 percent of the population for 2017 and 81.7 percent for 2016.
S. 38 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 39 Supplement Supplement → Human Capital → Human Capital
Diversity management Training
Percentage of permanent employees by gender and employment type, 2015-2017 Our Group received roughly €4 million in 2017 by leveraging our capacity to cover training costs with public funds. Gender 2017 2016 2015 Training hours per capita by employment tier and gender, 2016-2017 Part-time Full-time Part-time Full-time Part-time Full-time Female 89.17% 48.41% 87.36% 52.07% 87.29% 53.15% 2017 2016 Male 10.83% 51.59% 12.64% 47.93% 12.71% 46.85% Female Male Total Female Male Total Total 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% Top Management 15.58 7.81 8.26 6.02 5.90 5.91 Executive 25.26 23.26 23.59 16.82 15.17 15.44 Percentage of female with part-time contracts out of all women by employment tier, Middle Management 19.44 19.10 19.21 19.40 16.81 17.63 2015-2017 Staff 23.38 25.80 24.40 23.66 26.77 24.89 Total 23.18 24.80 23.91 23.44 25.17 24.17 Employment tier 2017 2016 2015 Executive 3.03% 3.60% 4.73% This data was drawn from a population that represented 95.9 percent of the population for 2017 and 91.1 percent Middle management 15.53% 12.91% 11.63% for 2016. Training hours included e-learning, classroom instruction and on-the-job training. Staff 25.31% 21.07% 19.71%
Number and percentage of employees promoted to higher contractual job grade by Industrial Relations2 country and gender, 2017A
Country Number Percentage At UniCredit, we strongly believe in the importance of social dialogue, particularly regarding the Group’s labor Female Male Female Male practices. Social dialogue enhances our ability to cooperate, improves our listening skills and expands our Italy 807 1,041 43.67% 56.33% understanding of domestic and global labor needs. A consistent, Groupwide approach has maintained our high Germany 223 274 44.87% 55.13% standard of social dialogue in recent years, helping us to manage the challenging goals of our business strategies. Austria 116 129 47.35% 52.65% Bosnia and Herzegovina 78 40 66.10% 33.90% In every country where we operate, we remain committed to improving UniCredit’s social dialogue, focusing on Bulgaria 13 12 52.00% 48.00% Croatia 290 118 71.08% 28.92% building on our strong European identity. At the national level, workers’ interests may be represented in our Group Czech Republic 280 172 61.95% 38.05% by trade unions, works councils or other representatives, in line with applicable labor laws and local industrial Hungary 36 21 63.16% 36.84% relations systems. At the international level, workers are represented by the European Works Council (EWC), which, Romania 300 113 72.64% 27.36% since it was founded in 2007, has worked to ensure the right to information and consultation on transnational Russia 24 30 44.44% 55.56% Group topics that could significantly affect workers’ interests. It currently has 35 members, representing 17 Serbia 5 5 50.00% 50.00% countries (Austria, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Germany, Hungary, Ireland, Italy, Slovenia 10 7 58.82% 41.18% Luxembourg, Poland, Romania, Russia, Serbia, Slovakia, Slovenia and the United Kingdom). OtherB 21 16 56.67% 43.24% Total 2,203 1,978 52.69% 47.31% Over the past 10 years, UniCredit and the EWC have achieved important results, defining a distinctive global approach A. Data represents 91.8 percent of the population for 2017. to industrial relations. The 4 joint declarations signed over the last decade demonstrate their success in improving B. In 2017, Other includes: Brazil, Ireland, Latvia, Luxembourg, Poland, Singapore, Slovakia, United Kingdom and United States of America. social dialogue across Europe by establishing a global strategic overview that facilitates social dialogue at local levels.
The Joint Declaration on Training, Learning and Professional Development (December 2008) is based on the A B Number of employees in protected categories by country, 2016-2017 principle that learning is a lifelong, continuous and effective experience. It defines guidelines and principles that,
Country 2017 2016 respecting the different cultural, social and historical backgrounds of each country where UniCredit is present, Italy 2,796 3,205 should support all actors involved and serve as a point of reference for all strategies, activities and initiatives in the Germany 655 663 fields of training, learning and professional development. Austria 358 362 Bosnia and Herzegovina 10 10 Bulgaria 127 115 Croatia 36 36 2. This data is drawn from the following subset of Group entities (which represents 98.6 percent of the reporting boundaries) unless stated otherwise: Czech Republic 55 48 • Italy: UniCredit SpA, UniCredit Business Integrated Solutions SCpA, UniCredit Leasing SpA, FinecoBank SpA Hungary 0 10 • Germany: UniCredit Bank AG, UniCredit Business Integrated Solutions SCpA • Austria: UniCredit Bank Austria AG, UniCredit Business Integrated Solutions Austria GmbH, UniCredit Leasing (Austria) GmbH, Schoellerbank Romania 12 11 Aktiengesellschaft, Card Complete Service Bank AG Russia 123 130 • Bosnia and Herzegovina: UniCredit Bank ad Banja Luka, UniCredit Bank dd Serbia 0 0 • Bulgaria: UniCredit Bulbank AD, UniCredit Leasing EAD, UniCredit Consumer Financing EAD • Croatia: Zagrebačka Banka DD Slovenia 4 4 • Czech Republic: UniCredit Bank Czech Republic and Slovakia as, UniCredit Business Integrated Solutions SCpA, UniCredit Leasing CZ as OtherC 4 286 • Hungary: UniCredit Bank Hungary Zrt, UniCredit Business Integrated Solutions SCpA, UniCredit Leasing Hungary Zrt • Romania: UniCredit Bank SA, UniCredit Business Integrated Solutions SCpA, UniCredit Business Integrated Solutions Austria GmbH, UniCredit Leasing A. Employees in protected categories are reported according to the requirements of applicable local laws. Due to privacy reasons the employment tier Corporation IFN SA, UniCredit Leasing Fleet Management Srl, UniCredit Consumer Financing IFN SA breakdown is not reported. • Russia: AO UniCredit Bank B. Data represents 92.7 percent of the population for 2017 and 92.2 percent for 2016. • Serbia: UniCredit Bank Serbia Jsc C. In 2017, Other includes: Brazil, Ireland, Latvia, Luxembourg, Poland, Singapore, Slovakia, United Kingdom and United States of America. • Slovenia: UniCredit Banka Slovenija dd, UniCredit Leasing, leasing, doo.
S. 40 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 41 Supplement Supplement → Human Capital → Human Capital
The Joint Declaration on Equal Opportunities and Non-Discrimination (May 2009) is intended to be a point of Notice period typically provided to employees and their elected representatives prior to reference for all employees to define the guidelines on sensitive issues such as diversity, equal opportunities and implementing significant operational changes that could affect them substantially, 2017 non-discrimination, with the purpose of creating a diverse corporate culture, improving the sense of belonging and Country Notice period Legal number of days Notice period specified enhancing the quality of life at work. notice in collective bargaining agreements The Joint Declaration on Responsible Sales (May 2015) promotes joint principles and guidelines in UniCredit’s Italy Yes 25 Yes commercial approach, defining the pillars by which they can be shared and respected: quality of products, Germany No Not applicable Not applicable customer centricity, employees’ professional development, and organizational governance. Austria UniCredit Bank Austria AG Yes 5A No In November 2017, in a first for the European banking sector, UniCredit and the EWC signed a Joint Declaration on UniCredit Business Integrated Solutions Austria GmbH No Not applicable Not applicable Work-Life Balance, aimed at promoting a set of specific, concrete actions to support work-life balance across the Bosnia and Herzegovina Yes 15 No B Group. The document calls for a general approach to setting target standards in all of UniCredit’s legal entities and Bulgaria Yes 45 Yes all of the countries where the Group is present, with five areas of focus: digitization, space and time flexibility, time Croatia Yes 14 Yes management, well-being, and cultural change. In each of these focus areas, clear drivers are intended to guide and Czech Republic UniCredit Bank Czech Republic and Slovakia, as inspire country initiatives, in respect for local best practices already in place. Yes 60 No UniCredit Leasing CZ as Percentage of employees covered by collective bargaining agreements, 2016-2017A UniCredit Business Integrated Solutions SCpA Yes 60 Yes Hungary Yes 30 No Country 2017 2016 Romania Italy 100% 100% UniCredit Bank SA Yes 10C No Germany UniCredit Consumer Financing IFN SA UniCredit Bank AG 40.95% 45.60% UniCredit Leasing Corporation IFN SA No Not applicable Not applicable UniCredit Business Integrated Solutions SCpA 49.56% 51.10% UniCredit Leasing Fleet Management Srl AustriaB 100% 100% UniCredit Business Integrated Solutions SCpA Bosnia and Herzegovina 100% 100% Yes 30 Yes UniCredit Business Integrated Solutions Austria GmbH BulgariaC 59.74% 60% Russia Yes 60 No Croatia 100% 100% Serbia No Not applicable Not applicable Czech Republic 100% 100% Slovenia Yes 8 Yes HungaryD Not applicable Not applicable Romania A. 5 days to give notice to individual employees. No specific period for organizational changes. B. Refers to UniCredit Bulbank AD. UniCredit Bank SA C. Notice period might change according to the situation. UniCredit Consumer Financing IFN SA 93% Not applicable UniCredit Leasing Corporation IFN SA UniCredit Business Integrated Solutions SCpA 100% 100% UniCredit Business Integrated Solutions Austria GmbH Russia 100% 100% SerbiaD Not applicable Not applicable Slovenia 100% 100%
A. The collective bargaining agreement refers to national, sector and company level. B. Refers to UniCredit Bank Austria AG. C. Refers to UniCredit Bulbank AD. D. There is no collective bargaining agreement at the branch and country level as of yet.
S. 42 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 43 Supplement Supplement → Human Capital → Human Capital
Welfare and work-life balance3 A An adequate and proportionate balance between professional and private life has a positive impact on the Welfare system, 2017 workplace, productivity and employees’ overall sense of belonging to a company, while also improving their quality Country National mandatory Voluntary company of life and well-being. welfare system welfare system Italy Yes Yes Germany Yes Yes Specific benefits are defined at the country level, due to differences in local laws and practices. In this respect, the Austria Yes Yes Joint Declaration on Work-Life Balance represents the first step towards defining a Groupwide approach to this area. Bosnia and Herzegovina Yes No Bulgaria Yes Yes UniCredit intends to continuously enhance its current practices, while fully respecting the specific features of Croatia Yes No Czech Republic individual countries. The innovative approach defined by the joint declaration aims to inspire and address local UniCredit Bank Czech Republic and Slovakia, as Yes Yes initiatives by identifying specific macro-areas of focus and promoting a set of concrete actions and clear drivers. UniCredit Leasing CZ as UniCredit Business Integrated Solutions SCpA Yes No Retirement plans offered to employees, 2017 Hungary Yes Yes Romania Country Principal Contribution from Contribution from employer UniCredit Bank SA retirement plans employees UniCredit Consumer Financing IFN SA Defined Yes No ItalyA 2% or 3%B Minimum 0.5% UniCredit Leasing Corporation IFN SA contribution plan UniCredit Leasing Fleet Management Srl Germany UniCredit Business Integrated Solutions SCpA BVV: 2.5 % of gross income up to Yes Yes gross yearly income of €61,548 UniCredit Business Integrated Solutions Austria GmbH Agfa: employer pays 2.5% of gross income up Russia Yes Yes Defined UniCredit Bank AG contributions of 0.25 gross to a gross yearly income Serbia Yes Yes contribution plan monthly salary per year (1 gross of €61,548 Slovenia Yes No monthly salary for “first and senior vice presidents”) A. The welfare system includes pension plan and/or health insurance plans, in accordance with different local laws. Any employee can access voluntary 2.5% of gross income up company welfare systems where available. Defined 2.5 % of gross income up to UniCredit Business Integrated Solutions SCpA to gross yearly income contribution plan gross yearly income of €60,012 of €60,012 Austria Transition assistance programs to support employees, 2017A Arrangements between Defined the pension fund and UniCredit Bank Austria AG 2.9% or more Country The program includes: contribution plan employee are made on an individual basis Pre- Retraining for Severance Job Assistance retirement those intending pay placement transitioning Arrangements between planning for to continue services to non-working Defined the pension fund and UniCredit Business Integrated Solutions Austria GmbH 2.5% of the yearly gross salary intended working life (training, contribution plan employee are made on retirees counseling) an individual basis Italy Yes No Yes Yes Yes Bosnia and Herzegovina No plans Not applicable Not applicable Bulgaria No plans Not applicable Not applicable Germany Croatia No plans Not applicable Not applicable UniCredit Bank AG Yes Yes Yes Yes No Czech Republic UniCredit Business Integrated Solutions SCpA Yes No Yes Yes No Defined 19,500 CZK (approximately UniCredit Bank Czech Republic and Slovakia, as Not specifically required Austria contribution plan €780), not applicable for all Defined 15,000 CZK UniCredit Bank Austria AG Yes Yes Yes Yes Yes UniCredit Leasing CZ as Not specifically required contribution plan (approximately €600) UniCredit Business Integrated Solutions Austria GmbH Yes No Yes Yes Yes UniCredit Business Integrated Solutions SCpA No plans Not applicable Not applicable Bosnia and Herzegovina No No Yes No No Hungary B UniCredit Bank Hungary Zrt Defined Max 10% of Bulgaria No No Yes No No No UniCredit Leasing Hungary Zrt contribution plan gross base salary Croatia No Yes Yes No No Defined Max 50% UniCredit Business Integrated Solutions SCpA Not specifically required Czech Republic contribution plan of the minimum wage UniCredit Bank Czech Republic and Slovakia, as Romania Yes Yes Yes Yes No UniCredit Bank SA Arrangements between UniCredit Leasing CZ as Approximately 100 RON UniCredit Consumer Financing IFN SA Defined the pension fund and (approximately €21) UniCredit Business Integrated Solutions SCpA No Yes Yes Yes No UniCredit Leasing Corporation IFN SA contribution plan employee are made on of the monthly salary Hungary UniCredit Leasing Fleet Management Srl an individual basis UniCredit Business Integrated Solutions SCpA Arrangements between UniCredit Bank Hungary Zrt Approximately 100 RON No No Yes Yes Yes Defined the pension fund and UniCredit Leasing Hungary Zrt (approximately €21) UniCredit Business Integrated Solutions Austria GmbH contribution plan employee are made on of the monthly salary UniCredit Business Integrated Solutions SCpA No No Yes No No an individual basis Defined 7% of the monthly base Romania No No Yes No No Russia 7% of the monthly base salary contribution plan salary Russia No No Yes No No Serbia No plans Not applicable Not applicable Serbia No No Yes No No Slovenia No plans Not applicable Not applicable Slovenia Yes No Yes No No A. The reported contribution percentages refer to the second section of the Fondo Pensione per il Personale delle Aziende del Gruppo UniCredit, the pension fund currently open to new participants. A. In some cases, the programs are provided only in case of company restructuring/reorganization. B. A further contribution of 2 percent for newly recruited staff (art. 46, paragraph 3 - National Collective Bargaining Agreement of ABI, March 3, 2015) is added to B. Refers to UniCredit Bulbank AD. this assumption for 4 consecutive years; consequently, the contribution from the employer amounts to 4 percent for this category.
3. The tables under this paragraph refer to the perimeter defined at page S.41 - Industrial Relations.
S. 44 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 45 Supplement Supplement → Human Capital → Human Capital
Health and safety management4 Formal agreements with employees’ representatives on health and safety issues, 2017A Country Existence of formal Health and safety in the workplace requires much more than meeting specific legal obligations. It must be a core agreements with value, with the ultimate goal of guaranteeing well-being at work through a combination of actions and systems. employees’ representatives Italy No Agreements Germany UniCredit has launched numerous initiatives to help reach this objective, while ensuring full compliance with all UniCredit Bank AG No Agreements applicable laws. UniCredit Business Integrated Solutions SCpA Agreements at local level AustriaB No Agreements These include: Bosnia and HerzegovinaC Agreements at local level • adequate evaluation of risks (e.g., analysis and verification of staff work activities, including the nature of the job, Bulgaria Agreements at local level the instruments for performing the job, work spaces, individual and collective protection measures, technical Croatia Agreements at local level infrastructure and contractual matters – both for internal and contracted positions) Czech Republic Agreements at local level • realizing a higher level of wellness at work through dedicated initiatives, workshops and training courses. Hungary UniCredit Bank Hungary Zrt Agreements at local level In 2017, we launched a survey in Italy to evaluate work-stress related risks. This has helped to identify the main UniCredit Leasing Hungary Zrt criticalities so they can be addressed with specific actions and solutions, shared with trade unions. UniCredit Business Integrated Solutions SCpA No Agreements D Formal joint management-worker health and safety committees, 2017 Romania Agreements at local level Russia Agreements at local level Country Formal joint Level at which the Percentage Serbia No Agreements management-worker committee operates of employees Slovenia No Agreements health and safety represented committee A. The employees’ representatives may refer to Trade Unions, Work Council, etc. Italy No Not applicable Not applicable B. Refers to UniCredit Bank Austria AG and Schoellerbank Aktiengesellschaft. Germany Yes Legal Entity 100% C. Refers to UniCredit Bank ad Banja Luka. D. Refers to UniCredit Bank SA, UniCredit Business Integrated Solutions SCpA and UniCredit Business Integrated Solutions Austria GmbH. AustriaA Yes Legal Entity 100% Bosnia and HerzegovinaB Yes Legal Entity 100% Bulgaria Yes Legal Entity 100% Rates of injury, 2016-2017A Croatia Yes Legal Entity 100% Czech Republic Country 2017 2016 UniCredit Bank Czech Republic and Slovakia, as Female Male Female Male Yes Legal Entity 100% Italy 2.04 1.18 2.31 1.46 UniCredit Leasing CZ as Germany 3.72 1.64 4.10 1.65 UniCredit Business Integrated Solutions SCpA No Not applicable Not applicable Austria 0.61 0.30 1.62 0.61 Hungary No Not applicable Not applicable Bosnia and Herzegovina 0.00 0.00 1.76 0.00 RomaniaC Yes Legal Entity 100% Bulgaria 0.56 0.00 0.14 0.00 Russia No Not applicable Not applicable Croatia 1.00 0.52 1.10 0.49 Serbia No Not applicable Not applicable Czech Republic 0.87 0.00 0.30 0.00 Slovenia No Not applicable Not applicable Hungary 0.99 0.72 0.65 1.46
A. Refers to UniCredit Bank Austria AG and Schoellerbank Aktiengesellschaft. Romania 0.13 0.00 0.00 0.00 B. Refers to UniCredit Bank ad Banja Luka. Russia 0.19 0.00 0.19 0.00 C. Refers to UniCredit Bank SA, UniCredit Business Integrated Solutions SCpA and UniCredit Business Integrated Solutions Austria GmbH. Serbia 0.00 0.00 0.00 0.00 Slovenia 2.74 2.50 4.07 0.00
A. This data was drawn from a population that represented 95.3 percent of the reporting boundaries. Injuries are recorded as per applicable local law. Country to country comparison can be misleading due to different tracking systems and differences in local laws. This was calculated as follows: (total no. of workplace injuries/total working hours)*1,000,000.
4. The tables under this paragraph refer to the perimeter defined at page S.41 - Industrial Relations.
S. 46 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 47 Supplement Supplement → Human Capital → Human Capital
Rates of lost days, 2016-2017A Disputes concerning labor, welfare issues, Country 2017 2016 5 Female Male Female Male administrative bodies and discrimination Italy 1.13 0.95 1.10 0.92 Number of disputes concerning labor issues, 2017 Germany 0.02 0.00 0.02 0.01 Austria 0.01 0.03 0.00 0.00 Country Opened prior Opened Closed Open as Dec. 31, Bosnia and Herzegovina 0.18 0.00 0.22 0.09 to 2017 in 2017 in 2017 2017 Bulgaria 0.03 0.00 0.06 0.00 Italy 670 158 196 632 Germany Croatia 0.20 0.00 0.31 0.13 UniCredit Bank AG 19 17 18 18 Czech Republic 0.01 0.00 0.03 0.00 UniCredit Business Integrated Solutions SCpA 2 2 3 1 Hungary 0.02 0.06 0.01 0.00 Austria Romania 0.00 0.00 0.01 0.00 UniCredit Bank Austria AG 13 6 13 6 Russia 0.00 0.00 0.01 0.00 UniCredit Business Integrated Solutions Austria GmbH 6 1 4 3 Serbia 0.00 0.00 0.00 0.00 Bosnia and Herzegovina 45 0 6 39 Slovenia 0.43 0.33 0.57 0.37 Bulgaria 7 1 3 5 Croatia 28 1 1 28 A. Data represents 96.8 percent of the population for 2017 and 95.8 percent for 2016. Injuries are recorded as per applicable local law. Country to country Czech Republic comparison can be misleading due to different tracking systems and differences in local laws. This was calculated as follows: (total no. of days of absence due UniCredit Business Integrated Solutions SCpA 1 1 2 0 to injuries/total working hours)*1,000,000. Hungary UniCredit Bank Hungary Zrt 0 1 1 0
A Romania Rates of absenteeism, 2016-2017 UniCredit Bank SA 4 4 5 3 Russia 1 2 2 1 Country 2017 2016 Serbia 10 0 3 7 Female Male Female Male Slovenia 0 1 1 0 Italy 8.62 7.67 8.66 7.48 Germany 8.19 5.31 7.89 5.26 Number of disputes concerning welfare issues, 2017 Austria 10.16 8.68 10.14 9.29 Bosnia and Herzegovina 3.15 2.31 3.86 1.68 Country Opened prior Opened Closed Open as Dec. 31, Bulgaria 4.67 1.95 4.53 2.41 to 2017 in 2017 in 2017 2017 Italy 67 5 12 60 Croatia 5.95 3.71 5.61 4.22 Croatia 0 1 1 0 Czech Republic 5.90 2.99 5.40 2.67 Hungary 5.88 2.02 7.11 2.49 Number of disputes concerning administrative bodies, 2017 Romania 3.52 3.79 6.14 3.78 Russia 3.35 2.80 3.38 2.96 Country Opened prior Opened Closed Open as Dec. 31, Serbia 17.04 0.91 2.13 1.77 to 2017 in 2017 in 2017 2017 Italy 2 0 0 2 Slovenia 9.05 4.94 8.84 4.91 Czech Republic
A. Data represents 96.8 percent of the population for 2017 and 95.8 percent for 2016. Injuries are recorded as per applicable local law. Country to country UniCredit Bank Czech Republic and Slovakia, as 0 1 1 0 comparison can be misleading due to different tracking systems and differences in local laws. This was calculated as follows: (total no. of days of absence/ UniCredit Leasing CZ as 0 2 2 0 total working hours)*1,000,000. Days of absence refers to: injuries, illness, strikes and other reasons (e.g. medical controls, election days). Number of disputes concerning discrimination, 2017
Country Opened prior Opened Closed Open as Dec. 31, to 2017 in 2017 in 2017 2017 Italy 1 0 0 1 Germany UniCredit Bank AG 1 0 0 1 Romania UniCredit Bank SA 1 1 1 1
5. This data is drawn from the following subset of Group entities unless stated otherwise: • Italy: UniCredit SpA, UniCredit Business Integrated Solutions SCpA, UniCredit Leasing SpA, FinecoBank SpA • Germany: UniCredit Bank AG, UniCredit Business Integrated Solutions SCpA • Austria: UniCredit Bank Austria AG, UniCredit Business Integrated Solutions Austria GmbH • Bosnia and Herzegovina: UniCredit Bank ad Banja Luka, UniCredit Bank dd • Bulgaria: UniCredit Bulbank AD • Croatia: Zagrebačka Banka DD • Czech Republic: UniCredit Bank Czech Republic and Slovakia as, UniCredit Business Integrated Solutions SCpA, UniCredit Leasing CZ as • Hungary: UniCredit Bank Hungary Zrt, UniCredit Business Integrated Solutions SCpA, UniCredit Leasing Hungary Zrt • Romania: UniCredit Bank SA, UniCredit Business Integrated Solutions SCpA, UniCredit Business Integrated Solutions Austria GmbH, UniCredit Leasing Corporation IFN SA, UniCredit Leasing Fleet Management Srl, UniCredit Consumer Financing IFN SA • Russia: AO UniCredit Bank • Serbia: UniCredit Bank Serbia Jsc • Slovenia: UniCredit Banka Slovenija dd, UniCredit Leasing, leasing, doo Due to improved data collection process, some figures may differ from data presented in the 2016 Integrated Report.
S. 48 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 49 Supplement Social and relationship → Social and relationship Capital Capital Customer satisfaction After years of experience and acquired knowledge in gathering insights from customers and prospects, UniCredit has defined a new approach, not only based on reputation, which combines an overall view in terms of satisfaction Customer distribution and brand positioning, with a more complete set of KPIs business-related as acquisition potential, cross selling opportunities, attrition risk, share of wallet. Number of customers by division and country as of December 31, 2017 The new main KPI is the Customer First Index, based on 2 questions: overall satisfaction and preference. The name Commercial Banking Division Number Italy of this indicator is embedded in the first of our Five fundamentals which indicates “The ability to put the client’s Retail 7,433,055 real problems and opportunities at the core of any activity”. Corporate 48,915 Private Banking 148,616 Compared to what done in the past, with the Benchmarking study we simplified and made more effective and Germany efficient the general approach with the following benefits: Retail 1,220,779 • One survey cross segment and cross country with only one provider Corporate 300,128 • Double Blind approach – Random selection of UniCredit and competitors’ clients by research provider Private Banking 40,307 • Shorter questionnaire – reduced complexity and lowered time & cost to gain insight. Austria Retail 1,618,853 The Customer First Index is measured generally two times per year across all Group countries, while additional Corporate 20,423 surveys could be carried out in line with local needs. Private Banking 27,677 Customer First Index results, 2017 Non-Core 83,917 Asset Gathering Division 1,147,387 Country Retail Retail Corporate Corporate CEE Retail Division Competitors Competitors results results Bosnia and Herzegovina 662,186 Italy 62 63 57 58 Bulgaria 1,004,217 Germany 58 63 51 52 Croatia 977,119 Austria 50 63 55 61 Czech Republic (incl. Slovakia) 515,801 Bosnia and Herzegovina Hungary 314,090 UniCredit Bank ad Banja Luka 71 70 67 66 Romania 686,582 UniCredit Bank dd 72 70 71 63 Russia 622,080 Bulgaria 64 62 62 60 Serbia 247,539 Croatia 68 67 69 68 Slovenia 65,623 Czech Republic and Slovakia 74 65 Not available Not available CEE Corporate Division Hungary 61 58 60 59 Bosnia and Herzegovina 3,808 Romania 69 63 60 56 Bulgaria 12,458 Russia 73 71 83 68 Croatia 6,119 Serbia 64 59 54 56 Czech Republic (incl. Slovakia) 25,582 Slovenia 72 63 63 50 Hungary 8,786 Romania 7,627 Russia 5,630 Serbia 4,005 Slovenia 2,499 CEE Private Banking Division Bulgaria 1,931 Croatia 2,510 Czech Republic (incl. Slovakia) 12,013 Hungary 1,209 Romania 1,001 Russia 1,761 Slovenia 346
S. 50 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 51 Supplement Supplement → Social and relationship Capital → Social and relationship Capital
Handling complaints Financial inclusion
UniCredit’s approach to complaints management is driven by the belief that a continuing dialogue and swift Percentage of total branches in sparsely settled or economically disadvantaged areas A responses are fundamental to addressing and improving our service quality and customer satisfaction. Clients can as of December 31, 2017 submit their complaints through a number of channels, including email, written letter or in person at one of our CountryB Percentage branches. Complaints are then managed locally or centrally, depending on the subject or type. Italy 19.7% Bosnia and Herzegovina 100.0% As far as verbal complaints are concerned, the goal is to improve the efficiency of our responses to various events Bulgaria 100.0% (Errors, Delays, Malfunctions and Churn Rate); rapid resolutions increase customer satisfaction and enhance their Croatia 100.0% confidence in the bank. Czech Republic 48.8% Hungary 100.0% The adequate management of complaints is fundamental to achieving operational excellence and reducing risks. Romania 100.0% Complaints may highlight areas where service quality can be improved, with positive effects on risk mitigation. Russia 100.0% In addition, an effective and efficient management of complaints is an opportunity to re-establish a satisfactory Serbia 100.0% relationship with the customers. Slovakia 82.8% Slovenia 38.5% As per our Global Compliance Guidelines - Complaint Management a complaint is any form of dissatisfaction expressed by a current, potential or former customer, certainly recognizable regarding the manner in which the A. Relating to EU Countries, in order to identify disadvantaged areas, we used the NUTS classification (Nomenclature of Territorial Units for Statistics: a hierarchical system for dividing up the economic territory of the EU). In particular, we considered those regions at level 2 of the NUTS classification whose GDP (Gross Domestic Group has managed a banking, finance or insurance transaction or service. Each UniCredit legal entity develops Product) per inhabitant is less than 75 percent of the Community average (http://ec.europa.eu/eurostat/statistics-explained/index.php/GDP_at_regional_ and regulates its own complaint management processes and defines the methods and timing applied to settling level#Regional_GDP_per_capita). Based on this classification, there are no sparsely settled or economically disadvantaged areas in Austria and Germany. B. In Bosnia and Herzegovina, Bulgaria, Croatia, Hungary, Romania, Russia and Serbia, we considered as disadvantaged areas the whole territory, since for a study complaints in accordance with their type and the manner of communication chosen by the customer. of the IMF published in October 2017 these countries are considered emerging markets and developing economies (https://www.imf.org/en/Publications/ WEO/Issues/2017/09/19/world-economic-outlook-october-2017). Retail division: number of recorded complaintsA
Country 2017 2016 2015 Recorded Written Recorded Written Recorded Written (written and (written and (written and verbal) verbal) verbal) Adherence to legal standards and voluntary codes Italy 298,160 38,029 350,355 38,338 367,032 32,484 related to marketing and communications GermanyB 27,078 5,245 38,009 6,159 67,851 26,168 Austria 42,906 2,601 32,321 1,776 55,961 2,502 UniCredit follows the Code of Marketing Communication Self-Regulation (www.iap.it) disseminated by the Istituto Bosnia & Herzegovina 5,892 684 6,124 1,347 4,773 1,274 dell’Autodisciplina Pubblicitaria (IAP), which commits its subscribers to transparent and honest advertising practices. BulgariaC 2,399 2,332 2,567 2,494 2,516 2,516 Croatia 30,376 6,218 30,184 6,502 32,422 9,279 UniCredit is also a member of the Utenti Pubblicità Associati (UPA), which supports the IAP. All UniCredit entities Czech Republic 12,979 8,627 7,949 4,627 7,638 4,656 follow the regulations disseminated by these bodies, particularly when local codes do not provide guidance on Hungary 7,318 4,226 8,208 4,342 12,306 7,413 topics covered by the UPA. Romania 4,112 2,864 4,394 2,350 4,136 2,366 Russia 27,657 19,249 30,177 21,137 30,189 23,392 All advertising and communication activities at UniCredit are managed by our Group Identity & Communications SerbiaD 925 925 744 744 778 769 department, which is responsible for assuring the effective application of the IAP’s code, as well as the oversight of Slovakia 4,554 3,955 4,127 3,983 4,556 4,484 the UniCredit Supervisory Body. Slovenia 1,430 846 1,849 869 1,594 890
A. In Italy, Germany and Austria the complaints refer to Individuals and Small Business. In our CEE Countries the complaints refer to Retail division. Totals are not In advertising related to investment products, all texts are submitted to the Commissione Nazionale per le Società provided because definitions and recording methods have not been completely aligned across all countries. e la Borsa (CONSOB) in Italy so they can be evaluated for regulatory compliance and consistency with the principles B. In 2017 and 2016, complaints refer only to Individuals. C. In 2015 all compliants were considered as written. of truth and transparency. D. Since 2016, according to local law all the complaints are considered as written. Main legal standards and voluntary codes related to marketing and communications adopted by Group Legal Entities
Country Description Austria Advertising Industry Ethics Code of the Austrian Society for Self - Regulation in Advertising (Werberat) Bosnia and Herzegovina Consumer Financial Protection Act which covers products and services advertisement, regulated by the Communications Regulatory Agency (CRA), which is established by the Law on Communications of Bosnia and Herzegovina and operates as an independent agency Bulgaria Code of Ethics of the Association of Banks in Bulgaria Croatia Code of Advertising issued by the Croatian Association of Advertising Agencies
S. 52 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 53 Supplement Natural Capital → Natural Capital
1 Environmental performance indicators Energy consumption per employee (GJ/capita), 2015-2017A
Country 2017 2016 2015 A Italy 32 33 34 Scope 1: direct GHG emissions (tons CO2 e), 2015-2017 Germany 47 44 43 Country 2017 2016 2015 Austria 60 61 54 Italy 27,488 40,042 40,147 CEE 23 23 24 Germany 19,622 17,825 16,466 Austria 2,721 2,560 2,716 A. Data for 2016 and 2015 covers a number of Legal Entities corresponding to a full-time equivalent of more than 93,000 and more than 96,000, respectively. CEE 13,480 10,922 10,559 Total 63,310 71,349 69,887 Copy paper consumption per employee (kg/capita), 2015-2017A
A. GHG emissions from sources owned or controlled by our Group, which includes direct energy consumption, road business travel and refrigerant gas leakages. Data for 2016 covers a number of Legal Entities corresponding to a full-time equivalent of more than 93,000 for direct energy consumption and more than Country 2017 2016 2015 84,000 for road business travel. Data for 2015 covers a number of Legal Entities corresponding to a full-time equivalent of more than 96,000 for direct energy Italy 57 61 50 consumption and more than 87,000 for road business travel. Germany 30 31 31 Austria 36 40 39 A CEE 50 51 52 Scope 2: indirect GHG emissions (tons CO2 e), 2015-2017 A. Data for 2016 and 2015 covers a number of Legal Entities corresponding to a full-time equivalent of more than 107,000 and more than 110,000, respectively. Country 2017 2016 2015 Italy 95,729 98,139 107,234 Germany 65,843 67,770 67,801 Approximately 97 percent of copy paper used Groupwide holds an environmental label: 20 percent Total Chlorine- Austria 16,589 17,055 17,398 free (TCF) or Elementary Chlorine-Free (ECF), 52 percent Forest Steward Council (FSC) certified, 24 percent both CEE 49,305 47,622 47,199 TCF/ECF and FSC. Total 227,467 230,587 239,632 3 A A. GHG emissions from purchased electricity, steam and heating/cooling consumed by equipment or systems owned or controlled by our Group. Data for 2016 Water usage per employee (m /capita), 2015-2017 and 2015 covers a number of Legal Entities corresponding to a full-time equivalent of more than 93,000 and more than 96,000, respectively. Country 2017 2016 2015 Italy 36 30 31 The table above reports our Scope 2 emissions according to the location-based calculation method. The GHG Germany 17 15 20 Protocol Scope 2 Guidance issued in 2015 details a parallel emissions calculation according to the market-based Austria 39 37 34 method: under this approach our 2017 Scope 2 emissions are 82,808 tons CO e. The source for the Residual Mix 2 CEE 11 13 13 emission factors we applied in this calculation (where available) is the 2016 European Residual Mixes, V.1.2, published by Association of Issuing Bodies (AIB) in June 2017. A. Data for 2016 and 2015 covers a number of Legal Entities corresponding to a full-time equivalent of more than 106,000 and more than 110,000, respectively. The Scope 2 component of Group GHG emission reduction objectives refers to emissions calculated in accordance with the location-based method. Waste production per employee (kg/capita), 2015-2017A
Scope 3: other indirect GHG emissions (tons CO e), 2015-2017A Country 2017 2016 2015 2 Italy 88 73 84 Country 2017 2016 2015 Germany 387 451 358 Italy 4,581 5,031 6,092 Austria 288 243 213 Germany 2,362 2,555 2,938 CEE 151 175 170 Austria 813 871 1,261 A. Data for 2016 and 2015 covers a number of Legal Entities corresponding to a full-time equivalent of more than 90,000 and more than 93,000, respectively. CEE 2,051 1,948 2,097 Total 9,806 10,406 12,388 A A. GHG emissions from air and rail business travel, from copy paper consumption, and from glass, paper and plastic disposal. Data for 2017 covers the full 2017 Waste by disposal method (%), 2016-2017 Integrated Report perimeter, except for rail business travel which covers a full-time equivalent of more than 86,000. Data for 2016 covers a number of Legal Entities corresponding to a full-time equivalent of more than 92,000 for copy paper consumption, more than 84,000 for air and rail business travel, and more Country Separation and recycling of Disposal Other Incineration than 90,000 for glass, paper and plastic disposal. Data for 2015 covers a number of Legal Entities corresponding to a full-time equivalent of more than 94,000 valuable materials in landfill treatment for copy paper consumption, more than 87,000 for air and rail business travel, and more than 93,000 for glass, paper and plastic disposal. 2017 2016 2017 2016 2017 2016 2017 2016 Italy 97.14 96.37 1.42 1.80 0.00 1.75 1.44 0.08 1. The sale in 2017 of Bank Pekao and Pioneer Global Asset Management, including their subsidiaries, may limit the comparison of 2017 data with that of Germany 67.88 73.07 32.08 26.89 0.00 0.00 0.04 0.04 2016 and 2015. Furthermore, due to new reporting requirements, the 2017 data perimeter differs to that of previous years, including now the full set of Austria 86.49 91.33 13.51 8.67 0.00 0.00 0.00 0.00 legal entities included in the 2017 Integrated Report perimeter, corresponding to more than 89,000 full-time equivalents. Due to improved processes in data collection, calculation and to periodical updates of GHG emission factors, several figures may differ from data presented in the 2016 Integrated Report. CEE 24.20 23.00 4.08 4.13 67.68 70.58 4.03 2.29 Country-to-country comparisons may be misleading as different tracking systems should be taken into account. A. Data for 2016 and 2015 covers a number of Legal Entities corresponding to a full-time equivalent of more than 90,000 and more than 93,000, respectively.
S. 54 UniCredit • 2017 Integrated Report UniCredit • 2017 Integrated Report S. 55 S SS SS Co p ian e t re air ine e a ior e p i it and tran paren C ear approa to ar et
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UniCredit S.p.A. A joint stock company Registered Office and Head Office in Milan: Piazza Gae Aulenti 3 - Tower A - 20154 Milano C C C Share capital €20,880,549,801.81 fully paid in, Fiscal Code, VAT number and Registration number By choosing to print 2017 Integrated Report on 100% recycled and Ecolable certified (no. FR/011/003) paper, UniCredit has avoided: with the Company Register of Milan-Monza-Brianza-Lodi:00348170101 Registered in the Register of Banking Groups and Parent Company of the UniCredit Banking Group, C e with cod. 02008.1; Cod. ABI 02008.1 of landfill green o e ga e Member of the National Interbank Deposit Guarantee Fund and of the National Compensation Fund Stamp duty paid virtually, if due - Auth. Agenzia delle Entrate, Ufficio di Roma 1, no. 143106/07 of 21.12.2007 h itre o ater o energ o ood
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